exv10w1






Exhibit 10.1




PURCHASE AND SALE AGREEMENT




BY AND BETWEEN




DIAMOND “M” PRODUCTION COMPANY




AS SELLER




AND




PARALLEL PETROLEUM CORPORATION




AND




TED COLLINS, JR.




AS BUYER




 









 








INDEX




	 	 	 	 	 
	 	 	PAGE	 
	ARTICLE 1. DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 2. SALE AND PURCHASE
	 	 	7	 
	 
	 	 	 	 
	ARTICLE 3. PURCHASE PRICE
	 	 	7	 
	 
	 	 	 	 
	3.1 Purchase Price
	 	 	7	 
	3.2 Earnest Money Deposit
	 	 	7	 
	3.3 Allocation
	 	 	7	 
	3.4 Preferential Rights
	 	 	7	 
	3.5 Consents
	 	 	8	 
	 
	 	 	 	 
	ARTICLE 4. REVIEW BY BUYER
	 	 	8	 
	 
	 	 	 	 
	4.1 Review of Records
	 	 	8	 
	4.2 Adjustment of Purchase Price for Title Defects
	 	 	8	 
	4.3 Waiver
	 	 	10	 
	 
	 	 	 	 
	ARTICLE 5. INSPECTION OF PROPERTIES
	 	 	10	 
	 
	 	 	 	 
	5.1 Physical and Environmental Inspection
	 	 	10	 
	5.2 Environmental Defects
	 	 	11	 
	 
	 	 	 	 
	ARTICLE 6. ACCOUNTING
	 	 	13	 
	 
	 	 	 	 
	6.1 Revenues, Expenses and Capital Expenditures
	 	 	13	 
	6.2 Taxes
	 	 	13	 
	6.3 Obligations and Credits
	 	 	14	 
	6.4 Gas Imbalances
	 	 	14	 
	6.5 Miscellaneous Accounting
	 	 	14	 
	6.6 Final Accounting Settlement
	 	 	15	 
	6.7 Post-Final Accounting Settlement
	 	 	15	 
	6.8 Audit Rights
	 	 	15	 
	 
	 	 	 	 
	ARTICLE 7. CASUALTY AND CONDEMNATION
	 	 	15	 
	 
	 	 	 	 
	ARTICLE 8. INDEMNITIES
	 	 	16	 
	 
	 	 	 	 
	8.1 Seller’s Indemnity Obligations (excluding Environmental Claims)
	 	 	16	 
	8.2 Buyer’s Indemnity Obligations (excluding Environmental Claims)
	 	 	16	 
	8.3 Environmental Claims
	 	 	17	 
	8.4 Asbestos and NORM
	 	 	17	 






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	 	 	PAGE	 
	8.5 Notice and Cooperation
	 	 	17	 
	8.6 Defense of Claims
	 	 	18	 
	8.7 Waiver of Certain Damages
	 	 	18	 
	8.8. Limitation on Indemnities
	 	 	18	 
	 
	 	 	 	 
	ARTICLE 9. WARRANTIES AND DISCLAIMERS
	 	 	19	 
	 
	 	 	 	 
	9.1 Special Warranty of Title
	 	 	19	 
	9.2 Disclaimer — Representations and Warranties
	 	 	19	 
	9.3 Disclaimer — Statements and Information
	 	 	19	 
	 
	 	 	 	 
	ARTICLE 10. SELLER’S REPRESENTATIONS
	 	 	19	 
	 
	 	 	 	 
	10.1 Organization and Good Standing
	 	 	19	 
	10.2 Corporate Authority; Authorization of Agreement
	 	 	20	 
	10.3 No Violations
	 	 	20	 
	10.4 Absence of Certain Changes
	 	 	20	 
	10.5 Operating Costs
	 	 	21	 
	10.6 Litigation and Other Disputes
	 	 	21	 
	10.7 Bankruptcy
	 	 	21	 
	10.8 Leases
	 	 	21	 
	10.9 Hydrocarbon Sales; Imbalances
	 	 	21	 
	10.10 Existing Commitments
	 	 	21	 
	10.11 Compliance With Law
	 	 	22	 
	10.12 Availability of Records
	 	 	22	 
	10.13 Material Contracts
	 	 	22	 
	10.14 Preferential Rights
	 	 	22	 
	10.15 Environmental
	 	 	22	 
	10.16 Suspense Accounts
	 	 	22	 
	10.17 Expenses and Costs and Payments Out of Production
	 	 	22	 
	10.18 Payout Balances
	 	 	22	 
	10.19 Use of Surface
	 	 	22	 
	10.20 Statements
	 	 	23	 
	10.21 Limitation on Representations
	 	 	23	 
	 
	 	 	 	 
	ARTICLE 11. BUYER’S REPRESENTATIONS
	 	 	23	 
	 
	 	 	 	 
	11.1 Organization and Good Standing
	 	 	23	 
	11.2 Corporate Authority; Authorization of Agreement
	 	 	23	 
	11.3 No Violations
	 	 	23	 
	11.4 SEC Disclosure
	 	 	24	 
	11.5 Statements
	 	 	24	 
	11.6 Independent Evaluation
	 	 	24	 
	11.7 Buyer’s Reliance
	 	 	24	 
	11.8 Qualified Buyer
	 	 	24	 






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	 	 	PAGE	 
	ARTICLE 12. ADDITIONAL AGREEMENTS
	 	 	25	 
	 
	 	 	 	 
	12.1 Covenants of Seller
	 	 	25	 
	12.2 Notice of Loss
	 	 	25	 
	12.3 Subsequent Operations
	 	 	25	 
	12.4 Buyer’s Assumption of Obligations
	 	 	25	 
	12.5 Records
	 	 	26	 
	 
	 	 	 	 
	ARTICLE 13. CONDITIONS PRECEDENT TO CLOSING
	 	 	26	 
	 
	 	 	 	 
	13.1 Conditions Precedent to Seller’s Obligation to Close
	 	 	26	 
	13.2 Conditions Precedent to Buyer’s Obligation to Close
	 	 	26	 
	 
	 	 	 	 
	ARTICLE 14. TERMINATION
	 	 	27	 
	 
	 	 	 	 
	14.1 Grounds for Termination
	 	 	27	 
	14.2 Effect of Termination
	 	 	27	 
	14.3 Return of Documents
	 	 	28	 
	14.4 Confidentiality
	 	 	28	 
	 
	 	 	 	 
	ARTICLE 15. THE CLOSING
	 	 	29	 
	 
	 	 	 	 
	15.1. Preliminary Closing Statement
	 	 	29	 
	15.2 Obligations of Seller at Closing
	 	 	29	 
	15.3 Obligations of Buyer at Closing
	 	 	29	 
	15.4 Site of Closing
	 	 	30	 
	 
	 	 	 	 
	ARTICLE 16. MISCELLANEOUS
	 	 	30	 
	 
	 	 	 	 
	16.1 Notices
	 	 	30	 
	16.2 Conveyance Costs
	 	 	31	 
	16.3 Brokers’ Fees
	 	 	31	 
	16.4 Further Assurances
	 	 	31	 
	16.5 Survival of Representations and Warranties
	 	 	31	 
	16.6 Amendments and Severability
	 	 	31	 
	16.7 Successors and Assigns
	 	 	32	 
	16.8 Headings
	 	 	32	 
	16.9 Governing Law
	 	 	32	 
	16.10 No Partnership Created
	 	 	32	 
	16.11 Public Announcements
	 	 	32	 
	16.12 No Third Party Beneficiaries
	 	 	32	 
	16.13 Deceptive Trade Practices
	 	 	32	 
	16.14 Tax Deferred Exchange Election
	 	 	32	 
	16.15 Not to be Construed Against Drafter
	 	 	33	 
	16.16 Entire Agreement
	 	 	33	 
	16.17 Conspicuousness of Provisions
	 	 	33	 
	16.18 Execution in Counterparts
	 	 	33	 






iii 









 






SCHEDULES




SCHEDULE 10.6 — LITIGATION AND CLAIMS

SCHEDULE 10.10 — CAPITAL COMMITMENTS

SCHEDULE 10.11 — VIOLATIONS OF LAW

SCHEDULE 10.13 —  MATERIAL CONTRACTS

SCHEDULE 10.14 —  PREFERENTIAL RIGHTS

SCHEDULE 10.15 —  ENVIRONMENTAL

SCHEDULE 10.16 —  SUSPENSE ACCOUNTS

SCHEDULE 10.18 —  PAYOUT BALANCES

SCHEDULE 10.19 —  SURFACE




EXHIBITS




EXHIBIT A —  ASSIGNMENT AND BILL OF SALE

EXHIBIT B —  CERTIFICATE

EXHIBIT C — DESCRIPTION OF LANDS

EXHIBIT C-1 — DESCRIPTION OF LEASES

EXHIBIT C-2 — DESCRIPTION OF WELLS

EXHIBIT D —  MATERIAL CONTRACTS

EXHIBIT E —  NON-FOREIGN AFFIDAVIT

EXHIBIT F —  EXCLUDED PROPERTIES

EXHIBIT G —  ALLOCATION OF PURCHASE PRICE

EXHIBIT H —  ENVIRONMENTAL ASSESSMENTS

EXHIBIT I — GAS IMBALANCES




iv 









 





PURCHASE AND SALE AGREEMENT




     THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) is dated effective May 1, 2008, by and
between DIAMOND “M” PRODUCTION COMPANY, a Delaware corporation, with an office at 2350 N. Sam
Houston Parkway East, Suite 125, Houston, Texas 77032 (hereinafter referred to as “Seller”) and
PARALLEL PETROLEUM CORPORATION, a Delaware corporation, whose address is 1004 North Big Spring,
Suite 400, Midland, Texas 79701, and TED COLLINS, JR., an individual, whose address is 508 W. Wall
Street, Suite 1200, Midland, Texas 79701 (hereinafter referred to as “Buyer”), and is based on the
following premises:



     WHEREAS, Seller desires to sell, assign and convey to Buyer and Buyer desires to purchase and
accept certain oil and gas properties and related interests; and



     WHEREAS, the parties have reached agreement regarding such sale and purchase.



     NOW, THEREFORE, for valuable consideration and the mutual covenants and agreements herein
contained, Seller and Buyer agree as follows:



ARTICLE 1. DEFINITIONS




     Definitions. In this Agreement, capitalized terms have the meanings provided in this Article
1, unless expressly provided otherwise in other Articles. All defined terms include both the
singular and the plural. All references to Articles or Sections refer to Articles or Sections in
this Agreement, and all references to Exhibits refer to the Exhibits attached to this Agreement.
The Exhibits which are attached hereto are incorporated in and made a part of this Agreement.



     “Accounting Referee” has the meaning set forth in Section 6.8.



     “Affiliate” means and includes any entity that, directly or indirectly, through one or more
intermediaries, controls or is controlled by or is under common control with the entity specified.



     “Alleged Title Defect” means a Title Defect (as hereinafter defined) which is asserted
by Buyer in accordance with Section 4.2.



     “Assignment and Bill of Sale” means a document in the form of Exhibit A.



     “Assumed Contracts” means all operating agreements, unit agreements, unit operating
agreements, exploration agreements, farmout agreements, farm-in agreements, Hydrocarbon sales,
purchase, gathering, transportation, treating, marketing, exchange, processing and fractionating
agreements, surface leases, and other contracts and agreements respecting the Subject Interests if
the same are either of record in the counties where the Properties are located, or are reflected or
referenced in Seller’s files.



1









 





     “Business Day” means a Day (as hereinafter defined) excluding Saturdays, Sundays and
U.S. legal holidays.



     “Casualty Loss” means any loss, damage or reduction in value resulting from mechanical
failure or defects, catastrophic occurrences, acts of God and any other losses which are not the
result of normal wear and tear or of natural reservoir changes.



     “Certificate” means a document in the form of Exhibit B.



     “Claim” means any and all claims, demands, suits, causes of action, investigations,
administrative proceedings, or other legal proceedings, losses, damages, liabilities, judgments,
assessments, settlements, fines, notices of violation, penalties, interest, obligations and costs
(including attorneys’ fees and costs of litigation) of any kind or character (whether or not
asserted prior to the date hereof, and whether known or unknown, fixed or unfixed, conditional or
unconditional, based on negligence, strict liability or otherwise, choate or inchoate, liquidated
or unliquidated, secured or unsecured, accrued, absolute, contingent or otherwise) which are
brought by or owed to a Third Party (as hereinafter defined).



     “Close” or “Closing” means the consummation of the transfer of title to the Subject
Interests to Buyer, including execution and delivery of all documents provided herein.



     “Closing Date” means August 15, 2008, or such other date as may be mutually agreed
upon by the parties or on which Closing occurs in accordance with the terms of this Agreement.



     “Day” means a calendar day consisting of twenty-four (24) hours from midnight to midnight.



     “Defensible Title” means, as to the Leases and Wells, such title held by Seller that,
subject to and except for the Permitted Encumbrances (as hereinafter defined):




     (a) Entitles Seller to own and receive payment of revenues for not less than the “Net
Revenue Interests” set forth on Exhibit C-1 or 
Exhibit C-2 of all oil, gas
and associated liquid and gaseous hydrocarbons produced, saved and marketed from the Leases
or Wells;




     (b) Obligates Seller to bear costs and expenses relating to the ownership, operation,
maintenance and repair of the wells and facilities located on or attributable to the Leases
or Wells in an amount not greater than the “Working
Interests” set forth on Exhibit
C-1 or
Exhibit C-2, unless there is a corresponding proportionate increase in
the Net Revenue Interests; and




     (c) Is free and clear of all liens, encumbrances, burdens and defects that a reasonable
and prudent person engaged in the business of ownership, development and operation of oil
and gas properties with knowledge of all applicable facts and circumstances and the
understanding of their legal significance would not be willing to accept with respect to
portions of the Leases or Wells affected thereby.



2









 





     “Earnest Money Deposit” has the meaning set forth in Section 3.2.



     “Effective Time” means May 1, 2008, at 7:00 a.m., local time where the Properties are
located.



     “Environmental Claims” means all Claims for pollution or environmental damages of any
kind, including without limitation, those relating to: (a) remediation and/or clean-up thereof, (b)
damage to and/or loss of any property or resource, and/or (c) injury or death of any person(s)
whomsoever, including without limitation Claims relating to breach of Environmental Laws, common
law causes of action such as negligence, gross negligence, strict liability, nuisance or trespass,
or fault imposed by statute, rule, regulation or otherwise (but specifically excluding any Claims
relating to asbestos or NORM (as hereinafter defined), which are covered by Section 8.4 hereof),
and including all costs associated with remediation and clean up, and fines and penalties
associated with any of the foregoing.



     “Environmental Defect” has the meaning set forth in Section 5.2.2.



     “Environmental Laws” means all laws, statutes, ordinances, permits, orders,
judgments, rules or regulations which are promulgated, issued or enacted by a governmental entity
having appropriate jurisdiction that, (a) relate to the prevention of pollution or environmental
damage, (b) the remediation of pollution or environmental damage, or (c) the protection of the
environment generally; including without limitation, the Clean Air Act, as amended, the Clean Water
Act, as amended, the Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended, the Federal Water Pollution Control Act, as amended, the Resource Conservation and
Recovery Act of 1976, as amended, the Safe Drinking Water Act, as amended, the Toxic Substance and
Control Act, as amended, the Superfund Amendments and Reauthorization Act of 1986, as amended, the
Hazardous and the Solid Waste Amendments Act of 1984, as amended, and the Oil Pollution Act of
1990, as amended.



     “Final Accounting Settlement” has the meaning set forth in Section 6.6.



     “Final Settlement Date” has the meaning set forth in Section 6.6.



     “Hydrocarbons” has the meaning given to such term in the definition of Properties.



     “Interest Adjustment” has the meaning set forth in Section 4.2.



     “Laws” means any and all applicable laws, statutes, ordinances, permits, decrees, orders,
judgments, rules or regulations (including, without limitation, Environmental Laws) which are
promulgated, issued or enacted by a governmental entity having appropriate jurisdiction.



     “Leases” has the meaning given to such term in the definition of Properties.



     “Material Contracts” shall mean those Assumed Contracts identified on Exhibit
D.



3









 





     “Non-Foreign Affidavit” means a document in the form of Exhibit E.



     “NORM” means naturally occurring radioactive materials.



     “Permitted Encumbrances” means:




     (a) Royalties, overriding royalties, production payments, reversionary interests,
convertible interests, net profits interests, division orders and similar burdens
encumbering the Leases and Wells as of the Effective Time to the extent the net cumulative
effect of such burdens do not operate to (i) reduce the net revenue interests of Seller in
the Leases or Wells to less than the net revenue interests set forth on
Exhibit C-1
or Exhibit C-2 or (ii) cause an increase in the working interest of Seller in any
Lease or Well from that shown on Exhibit C-1 or
Exhibit C-2 without a
proportionate increase in the net revenue interest of Seller for such Lease or Well;




     (b) Preferential purchase rights and consents to assignment and similar contractual
provisions encumbering the Subject Interests with respect to which, prior to Closing, (i)
waivers or consents are obtained from the appropriate parties, or (ii) the appropriate time
period for asserting such rights have expired without an exercise of such rights;




     (c) Preferential purchase rights encumbering the Subject Interests which are exercised
by a Third Party, if the affected Subject Interests are withdrawn from this sale transaction
and handled in accordance with Section 3.4;




     (d) All rights to consent by, required notices to, filings with, or other actions by
governmental entities in connection with the sale or conveyance of the Subject Interests, if
the same are customarily obtained subsequent to the transfer of title;




     (e) Rights reserved to or vested in any governmental entity having appropriate
jurisdiction to control or regulate the Properties in any manner whatsoever, and all Laws of
any such governmental entity;




     (f) Easements, rights-of-way, servitudes, surface leases, sub-surface leases,
pipelines, platforms, facilities, utility lines, telephone lines, power lines, and
structures on, over and through the Properties, to the extent such rights, interests or
structures do not materially interfere with the operation of the Properties;




     (g) Liens for taxes or assessments not yet due or not yet delinquent or, if delinquent,
that are being contested by Seller in good faith in the normal course of business;




     (h) Liens of operators relating to obligations not yet due or not yet delinquent or, if
delinquent, that are being contested by Seller in good faith in the normal course of
business;



4









 






     (i) The Material Contracts;




     (j) Title Defects that Buyer has waived under Section 4.3, but not those claimed by
Buyer under Seller’s special warranty of title contained in the Assignment and Bill of Sale,
and




     (k) Such encumbrances or burdens on, or defects or irregularities in the title to, the
Subject Interests that do not materially interfere with the operation, value or use of the
Subject Interests affected thereby and that would be considered not material by a reasonable
person engaged in the business or ownership, development and operation of oil and gas
properties when applying general industry standards.



     “Properties” means the following properties (real, personal or mixed) and rights (contractual
or otherwise):




     (a) The oil and gas leasehold interests, fee interests and mineral interests in the
lands described on Exhibit C, including, but not limited to those interests created
or described in the instruments described in Exhibit C-1 (collectively, the
“Leases”);




     (b) The oil and gas wells located on the Leases and described on Exhibit C-2
(the “Wells”);




     (c) All of the presently existing and valid unitization and pooling agreements and
units (including all units formed by voluntary agreement and those formed under the rules,
regulations, orders or other official acts of any governmental entity having appropriate
jurisdiction) to the extent they relate to any of the interests in the Leases or the Wells;




     (d) All oil, gas and/or other liquid or gaseous hydrocarbons (collectively, the
“Hydrocarbons”) produced from or attributable to the Leases or the Wells and attributable
to the period from and after the Effective Time;




     (e) All of the presently existing and valid oil sales contracts, casinghead gas sales
contracts, gas sales contracts, processing contracts, gathering contracts, transportation
contracts, easements, rights-of-way, servitudes, surface leases and other contracts
(including the Assumed Contracts), to the extent the same are assignable and relate to the
Leases or the Wells;




     (f) All personal property and improvements (collectively, the “Equipment”), including
without limitation, wells (whether producing, plugged and abandoned, shut-in, injection,
disposal or water supply), tanks, boilers, platforms, buildings, fixtures, machinery,
equipment, pipelines, utility lines, power lines, telephone lines, telegraph lines and
other appurtenances located on, in, under and about the Leases or Wells, to the extent the
same are situated upon and used or held for use by Seller in connection with the ownership,
operation, maintenance and repair of the Leases or the Wells, subject to the reservations
stated below;



5









 






     (g) All franchises, licenses, permits, approvals, consents, certificates and other
authorizations and other rights granted by governmental authorities and all certificates of
convenience or necessity, immunities, privileges, grants and other rights that relate to the
Properties or the ownership or operation of any thereof, to the extent the same are
assignable (the “Permits”); and




     (h) All of Seller’s “Records” (hereinafter defined).


Seller EXCEPTS, RESERVES AND RETAINS unto itself, its successors and assigns, and specifically
excludes from the Properties, those properties (real, personal or mixed) and rights (contractual or
otherwise) more particularly described on Exhibit F attached hereto.




     “Purchase Price” has the meaning set forth in Section 3.1.



     “Records” means all of Seller’s books, records and files related to the Properties, including
all (i) abstracts, title opinions, title reports, environmental site assessments, environmental
compliance reports, lease and land files, surveys, analyses, compilations, correspondence, filings
with and reports to regulatory agencies and other documents, contracts, agreements and instruments
that in any manner relate to the Properties, (ii) computer databases that are owned by or licensed
to Seller that relate to the Properties, (iii) geophysical, geological, engineering, exploration,
production and other technical data, magnetic field recordings, digital processing tapes, field
prints, summaries, reports and maps, whether written or in electronically reproducible form, that
are in the possession of Seller and relate to the Properties and (iv) all other books, records,
files and magnetic tapes containing title or other information that are in the possession of Seller
and relate to the Properties (the “Data”), but specifically excluding (i) previous offers and
economic analyses associated with the acquisition, sale or exchange of the Subject Interests, (ii)
interpretive information, (iii) personnel information, (iv) corporate, legal, financial and tax
information, (v) information covered by a non-disclosure obligation, (vi) information covered by a
legal privilege and (vii) any other Data or information that Seller does not have the right to
assign to Buyer.



     “Subject Interests” means all of Seller’s right, title and interest in and to, or
derived from, the Properties.



     “Title Defect” means any lien, encumbrance, encroachment or defect associated with
Seller’s title to the Leases (excluding Permitted Encumbrances) that would cause Seller not to have
Defensible Title.



     “Third Party” means any person or entity, governmental or otherwise, other than Seller
and Buyer or their Affiliates.



     “Wells” has the meaning given to such term in the definition of Properties.



6









 





ARTICLE 2. SALE AND PURCHASE




     On the Closing Date, effective as of the Effective Time, and upon the terms and conditions
herein set forth, Seller agrees to sell and assign the Subject Interests to Buyer and Buyer agrees
to buy and accept the Subject Interests in the respective percentages set forth below.



     2.1. Percentages.



	 	 	 	 	 
	Parallel Petroleum Corporation
	 	89% of 8/8ths
	Ted Collins, Jr.
	 	11% of 8/8ths






ARTICLE 3. PURCHASE PRICE




     3.1 Purchase Price. Subject to adjustments as set forth herein, the total purchase
price for the Subject Interests shall be Thirty Nine Million Nine Hundred Thousand and No/100
Dollars (US $39,900,000.00) (the “Purchase Price”), payable in full at Closing in immediately
available funds.



     3.2 Earnest Money Deposit. Within one (1) Business Day of the execution of this
Agreement, Buyer shall pay to Seller a deposit in the amount of One Million Nine Hundred Ninety
Five Thousand and No/100 Dollars (US $1,995,000.00) (the “Earnest Money Deposit”). If Closing
occurs, the Purchase Price shall be credited by the amount of the Earnest Money Deposit. If
Closing does not occur, the Earnest Money Deposit shall be refunded to Buyer, unless (a) Closing
does not occur because of Buyer’s failure or refusal to Close in breach of this Agreement or (b)
because the conditions precedent to Seller’s obligation to Close provided in Sections 13.1.1 and
13.1.2 are unmet at the time set for Closing, in which case Seller shall retain the Earnest Money
Deposit as liquidated damages and not as a penalty. If, however, in the case of either (a) or (b)
above, any conditions precedent to Buyer’s obligation to Close provided in Section 13.2 are unmet
at the time set for Closing, Seller shall not be entitled to retain the Earnest Money Deposit as
hereinabove provided.



     3.3 Allocation. Attached hereto as Exhibit G is Buyer’s good faith allocation of the
Purchase Price which shall be used in providing any required preferential purchase right
notifications and in determining any Purchase Price adjustments pursuant to this Agreement.



     3.4 Preferential Rights. If any of the Subject Interests are burdened with
preferential purchase rights, the assignment of the Subject Interests subject to such preferential
rights shall be conditioned upon Seller obtaining the necessary waiver or expiration of such right;
and this Agreement shall not constitute an assignment or attempted assignment thereof without such
waiver or expiration. If the time for exercising any preferential purchase right has not expired
and the holder thereof has not waived the same prior to the Closing Date, the parties shall
postpone Closing until that date which is five (5) Business Days after the date on which the rights
have expired or on which notice of waiver has been
received. If, prior to Closing, a holder of a preferential purchase right notifies Seller that it
intends to exercise its rights with respect to



7









 







any of the Subject Interests to which its
preferential purchase right applies, the Subject Interests covered by said preferential purchase
right shall be excluded from the Subject Interests to be conveyed to Buyer, and the Purchase Price
shall be reduced by the value allocated to said Subject Interests by Buyer in accordance with
Section 3.3. If the holder of the preferential purchase right fails to consummate the purchase of
the Subject Interests that are the subject of any notice of an intent to exercise such right
received by Seller before or after Closing, Seller shall promptly notify Buyer in writing. In such
event, the Closing Date shall be extended to the first Business Day following the sixtieth (60th)
day after Seller gives Buyer such notice, at which time Seller shall sell to Buyer, and Buyer shall
purchase from Seller, such Subject Interests under the terms of this Agreement for a price equal to
the aforesaid value allocated to such Subject Interests. Notwithstanding the foregoing, Buyer
shall have no obligation to purchase such Subject Interests if Buyer does not receive such notice
within ninety (90) Days after August 15, 2008.



     3.5 Consents. If any of the Leases require the consent of a Third Party to assign Seller’s
interest therein, the assignment of the Subject Interests in and to such Lease(s) subject to
consent requirements shall be conditioned upon Seller obtaining such consent prior to Closing
(except for consents from governmental bodies customarily obtained after assignment which shall not
be required to be obtained prior to Closing). With respect to any leasehold interest for which
consent is not obtained prior to Closing, such interest shall not be conveyed to Buyer at Closing
and the Purchase Price shall be reduced by the value allocated to said Subject Interest by Buyer in
accordance with Section 3.3. If Seller obtains the required consent(s) within ninety (90) days
following Closing, Seller shall sell and Buyer shall purchase the interest(s) affected thereby
under the terms of this Agreement for a price equal to the Purchase Price adjustment made therefor
at Closing.



ARTICLE 4. REVIEW BY BUYER




     4.1 Review of Records. Seller shall make available to Buyer after execution of this
Agreement Records in Seller’s possession relating to the Properties including, without limitation
all environmental site assessments and environmental compliance reports in Seller’s possession
relating to the Properties which are listed on Exhibit H. Buyer shall be entitled to
review said Records during normal business hours or other mutually agreeable time and shall have a
right to request a reasonable number of copies of such Records, at Buyer’s expense.



     4.2 Adjustment of Purchase Price for Title Defects. As soon as reasonably practicable
after Buyer’s review of the Records in accordance with Section 4.1, but in no event later than
eight (8) Business Days prior to the Closing Date, Buyer shall notify Seller in writing of any
Leases or Wells which are subject to Alleged Title Defects and/or whose net revenue interest and/or
working interest is/are less than or greater than that amount specified on Exhibit C-1 or
Exhibit C-2 (collectively, the “Interest Adjustments”). Notice of Title Defects or
Interest Adjustments shall include a description and full explanation of each Title Defect and
Interest Adjustment being claimed and
a value which Buyer in good faith attributes to each. With respect to Alleged Title Defects,
Seller may undertake to satisfy some, all or none of those raised by Buyer, at Seller’s sole cost
and expense. Buyer and Seller shall meet at least three (3)



8









 







Business Days prior to the Closing
Date in an attempt to mutually agree on a resolution with respect to any Alleged Title Defects or
Interest Adjustments which by such time have not been agreed between the parties in writing. It is
recognized that good faith differences of opinion may exist between Buyer and Seller in connection
with Alleged Title Defects or Interest Adjustments, including without limitation, disputes as to
(i) whether or not the alleged defect constitutes a Title Defect within the meaning of this
Agreement, (ii) whether or not the magnitude of such defect is great enough that Buyer is
contractually entitled to assert such Title Defect, (iii) whether or not the Title Defect was
properly and timely asserted by Buyer pursuant to this Article, and (iv) the appropriate upward or
downward adjustment, if any, to be made to the Purchase Price on account of such Title Defect. In
determining whether a portion of a Lease contains a Title Defect, it is the intent of the parties
to include, when possible, only that portion of the Lease adversely affected. If the value
properly allocated to a Title Defect cannot be determined directly from Exhibit G because
the Title Defect is included within, but does not totally comprise, the Lease to which the
allocated value relates, Seller and Buyer shall attempt to proportionately reduce the allocated
value on Exhibit G. To the extent that an Alleged Title Defect being asserted is failure
of Seller to have in whole or in part Defensible Title to any portion(s) of the Leases or Wells (a
“Material Defect”) which remains on the scheduled Closing Date uncured or otherwise unresolved by
the parties, such affected portion(s) of the Leases or Wells shall be excluded from the Leases and
Wells conveyed to Buyer at Closing and the Purchase Price shall be reduced accordingly. If the
parties cannot mutually agree on a Purchase Price adjustment for a Material Defect, Buyer shall
have the right to (i) proceed to Closing and accept the Lease with the Material Defect with no
Purchase Price adjustment or (ii) terminate this Agreement as to the Lease or Well affected by the
Material Defect and receive a Purchase Price adjustment for such Lease or Well as set forth on
Exhibit G or, where applicable, the proportionate allocated value. If any difference of
opinion regarding an Alleged Title Defect (excluding any Material Defect) or Interest Adjustment or
value of the Title Defect (excluding any Material Defect) (collectively, the “Title Defect
Dispute”) is not resolved by mutual agreement of Buyer and Seller prior to the Closing Date, then
either party has the right, exercisable within sixty (60) days after the Closing Date, to refer the
same to arbitration in accordance with the following procedure.



     ANY SUCH ARBITRATION SHALL BE BINDING ARBITRATION HELD IN HOUSTON, TEXAS BEFORE ONE (1)
MUTUALLY AGREEABLE ARBITRATOR WHO IS AN ATTORNEY LICENSED IN THE STATE IN WHICH THE PROPERTIES ARE
LOCATED AND WHO HAS AT LEAST FIFTEEN (15) YEARS OIL AND GAS TITLE EXPERIENCE IN SUCH STATE. THE
ARBITRATION SHALL BE CONDUCTED IN ACCORDANCE WITH THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN
ARBITRATION ASSOCIATION; AND, TO THE MAXIMUM EXTENT APPLICABLE, THE FEDERAL ARBITRATION ACT (TITLE
9 OF THE UNITED STATES CODE). IF THERE IS ANY INCONSISTENCY BETWEEN THIS SECTION AND ANY STATUTE
OR RULES, THIS SECTION SHALL CONTROL. ARBITRATION SHALL BE INITIATED BY ONE PARTY (“CLAIMANT”)
GIVING WRITTEN NOTICE TO THE OTHER OR ADVERSARIAL PARTY (“RESPONDENT”) AND TO THE HOUSTON REGIONAL
OFFICE OF THE
AMERICAN ARBITRATION ASSOCIATION (“AAA”), ATTENTION: REGIONAL VICE PRESIDENT, WITH A COPY TO THE
ADMINISTRATOR OF THE AAA, THAT



9









 







THE CLAIMANT ELECTS TO REFER THE ARBITRABLE DISPUTE TO ARBITRATION,
AND THAT THE PARTIES HAVE APPOINTED AN ARBITRATOR, WHO SHALL BE IDENTIFIED IN SUCH NOTICE. IF THE
PARTIES FAIL TO AGREE ON AN ARBITRATOR WITHIN SUCH SIXTY (60) DAY PERIOD, AN ARBITRATOR SHALL BE
APPOINTED BY THE ADMINISTRATOR’S DESIGNEE. SELLER AND BUYER SHALL EACH PAY ONE-HALF OF THE
COMPENSATION AND EXPENSES OF THE ARBITRATOR, PROVIDED HOWEVER THAT ALL COSTS CAN BE ASSESSED
AGAINST THE LOSING PARTY, IF THE ARBITRATORS SO DECIDE. IN ADDITION TO THE FOREGOING QUALIFICATION
THE ARBITRATOR MUST BE A NEUTRAL PARTY WHO HAS NEVER BEEN AN OFFICER, DIRECTOR OR EMPLOYEE OF THE
PARTIES OR ANY OF THEIR AFFILIATES. THE HEARING SHALL BE COMMENCED WITHIN THIRTY (30) DAYS AFTER
NOTICE OF THE ARBITRATION IS GIVEN TO THE ADMINISTRATOR. THE PARTIES AND THE ARBITRATOR SHALL
PROCEED DILIGENTLY AND IN GOOD FAITH IN ORDER THAT THE ARBITRAL AWARD SHALL BE MADE AS PROMPTLY AS
POSSIBLE. THE DECISION OF THE ARBITRATOR REGARDING TITLE DEFECT DISPUTE(S) SHALL BE FINAL AS
BETWEEN THE PARTIES.



     Notwithstanding anything herein to the contrary, in no event shall either party have any
obligations hereunder with respect to any Title Defects or Interest Adjustments except to the
extent that (i) each such Title Defect or Interest Adjustment exceeds Fifty Thousand Dollars
($50,000) and (ii) all such Title Defects and Interest Adjustments exceed in the aggregate Three
Hundred Ninety Nine Thousand and No/100 Dollars (US $399,000.00), and each party hereby waives all
upward or downward adjustments to the Purchase Price for Title Defects and/or Interest Adjustments
the individual value of which is $50,000 or less and the cumulative value of which is $399,000.00
or less.



     4.3 Waiver. Except for claims Buyer asserts under Seller’s special warranty of title
described in Section 9.1, all Alleged Title Defects and Interest Adjustments which are not raised
by Buyer within the time period provided in Section 4.2 or which are raised and not thereafter
submitted to arbitration in accordance with such Section shall be deemed waived by Buyer for all
purposes, and Buyer shall have no right to seek an adjustment to the Purchase Price, make a claim
against Seller or seek indemnification from Seller on account of the same. All upward Interest
Adjustments which are not raised by Seller within the time period provided in Section 4.2 or which
are raised and not thereafter submitted to arbitration in accordance with such Section shall be
deemed waived by Seller for all purposes, and Seller shall have no right to seek an adjustment to
the Purchase Price, make a claim against Buyer or seek indemnification from Buyer on account of the
same.



ARTICLE 5. INSPECTION OF PROPERTIES




     5.1 Physical and Environmental Inspection. After execution of this Agreement, Seller shall permit Buyer and its authorized representatives
reasonable physical access to the Properties, at times approved by Seller and at Buyer’s sole cost,
risk and expense, for the



10









 







purposes of inspecting the same and conducting such tests, examinations,
investigations and assessments as may be reasonable and necessary to evaluate the physical and
environmental condition of the Properties. Buyer shall repair any damage to the Properties
resulting from its inspection, and releases the “Seller Group” (hereinafter defined) from, and
shall defend and indemnify the Seller Group from any and all losses, liabilities, damages,
expenses, costs, obligations and claims of whatsoever nature arising from Buyer inspecting the
Properties, including, without limitation, (i) all claims for personal injury to or death of
employees of Buyer, its agents, contractors, subcontractors or invitees and/or damage to the
property of Buyer or others acting on behalf of Buyer, REGARDLESS OF WHETHER SUCH CLAIMS ARE CAUSED
BY THE SOLE OR CONCURRENT NEGLIGENCE OF SELLER OR THE CONDITION OF THE PROPERTIES but excluding
claims caused by the gross negligence or willful misconduct of the Seller, and (ii) all claims for
personal injury to or death of Third Parties and damage to the property of Third Parties, to the
extent caused by the negligence, gross negligence or willful misconduct of Buyer, or its employees,
agents, contractors, subcontractors or invitees.



     5.2 Environmental Defects.




     5.2.1 Inspection and Test Results. Buyer agrees to provide Seller with a copy
of any and all environmental inspections and assessments, including, without limitation, all
written reports, data and conclusions. Buyer and Seller shall keep any and all data or
information acquired by all such examinations and results of all analysis of such data and
information strictly confidential and not disclose same to any person or agency other than
each party’s employees, consultants, lenders and partners, without the prior written
approval of the other party, unless required to do so by applicable Law or by the order of a
court or regulatory agency. Each party shall be responsible for insuring that the
employees, consultants, lenders and partners to whom it discloses such information (i) use
such information solely for the purposes of evaluating, negotiating, entering into and
performing this Agreement and the transaction contemplated hereby and (ii) hold the such
information in strictest confidence and observe the confidentiality obligations set forth
herein. The foregoing obligation of confidentiality shall survive for one (1) years after
the Closing and shall survive the termination of this Agreement without closing.




     5.2.2 Notice of Environmental Defects. Prior to Closing, Buyer shall review
the inspection and testing results of the Properties and determine if any “Environmental
Defect” (hereinafter defined) exists with respect to the Properties. An “Environmental
Defect” shall mean an Environmental Claim attributable to or arising out of a violation of
any Environmental Law, such Environmental Claim being (i) in effect on or before the
Effective Time and applicable to conditions prior to the Closing Date, (ii) made known to
Buyer prior to Closing and (iii) one which a prudent operator of oil and gas properties
would expect to be resolved, remediated or corrected by Seller prior to such operator’s
acquisition of the Properties. No later than eight (8) Business Days prior to the Closing
Date, Buyer shall notify Seller in writing of any Environmental Defects with respect to the
Properties, and the estimated value of any such Environmental Defects (e.g. the estimated
cost of remediating or correcting such Environmental Defects). In the event such notice is
not timely delivered, all Environmental Defects of which Buyer has notice



11









 







as of such date
shall be deemed waived for all purposes and Buyer shall thereafter have no right to claim
Environmental Defects; and in the event the Environmental Defect notice is timely delivered,
all Environmental Defects of which Buyer has notice as of such date and are not claimed in
such notice shall be deemed waived for all purposes.




     5.2.3 Rights and Remedies for Environmental Defects. (a) With respect to any
Environmental Defect affecting the Properties, Buyer may (i) request Seller to cure the
Environmental Defect to Buyer’s reasonable satisfaction, but Seller shall have no obligation
to cure the Environmental Defect (if Seller elects not to cure the Environmental Defect to
Buyer’s reasonable satisfaction or fails to do so for any reason prior to five (5) Business
Days before Closing, Buyer shall be deemed to have elected the following subparagraph (ii)),
or (ii) request an adjustment to the Purchase Price equal to the estimated value of the
Environmental Defect.




     (b) The rights and remedies of the parties with respect to any Environmental Defects
for which the Buyer requests a Purchase Price adjustment are as follows:




     (i) If the aggregate of Buyer’s good faith estimated value of all Environmental
Defects is less than or equal to Three Hundred Ninety Nine Thousand and No/100
Dollars (US $399,000.00), the parties shall be obligated to proceed with Closing as
to all of the Properties without curative action by Seller for all such
Environmental Defects and without an adjustment to the Purchase Price.




     (ii) If the aggregate of Buyer’s good faith estimated value of the
Environmental Defects exceeds Three Hundred Ninety Nine Thousand and No/100 Dollars
(US $399,000.00), and the parties agree with respect to the existence of such
Environmental Defects and the value thereof, the Purchase Price shall be reduced by
the positive difference between the agreed upon value of the Environmental Defects
and Three Hundred Ninety Nine Thousand and No/100 Dollars (US $399,000.00), and the
parties shall be obligated to proceed with Closing, subject to the termination
rights of the parties under subpart (iv) of this Section 5.2.3(b).




     (iii) If the aggregate of Buyer’s good faith estimated value of all
Environmental Defects exceeds Three Hundred Ninety Nine Thousand and No/100 Dollars
(US $399,000.00) and the parties cannot agree with respect to the existence of
and/or the value of the Environmental Defects, the parties shall refer the matter to
a mutually agreed upon third party expert for determination of the existence of
and/or the value of the Environmental Defects. The determination of
such expert shall be binding on the parties, and the Purchase Price shall be reduced
by the positive difference between the determined value of the Environmental Defects
and Three Hundred Ninety Nine Thousand and No/100 Dollars (US $399,000.00). The
parties shall be obligated to proceed with Closing after such determination of such
expert, subject to the termination rights of the parties under subpart (iv) of this
Section 5.2.3(b).



12









 






     (iv) If the aggregate value of the Environmental Defects equals or exceeds ten
percent (10%) of the Purchase Price, or the aggregate value of the Environmental
Defects and the Alleged Title Defects equals or exceeds twenty percent (20%) of the
Purchase Price, either party may terminate this Agreement, and neither party shall
have any further obligation to conclude the transfer of the Properties under this
Agreement. However, the right of termination under this subpart (iv) must be
exercised no later than three (3) Business Days before Closing (or, in the case of a
determination under (iii), within five (5) Business Days after the determination of
the expert), after which both parties shall be deemed to have waived their
termination rights under this subpart (iv) in connection with Environmental Defects.




     (c) Notwithstanding any agreement by Buyer and Seller to cure an Environmental Defect
or to reduce the Purchase Price due to an Environmental Defect with respect to the
Properties, or any other provision of this Agreement, if the terms and conditions of this
Article 5 are satisfied and the Environmental Defect is cured or the Purchase Price is
reduced as provided herein, then at Closing Buyer shall assume all environmental obligations
with respect to the Properties, as provided in Sections 8.3 and 12.4 hereof.



ARTICLE 6. ACCOUNTING




     6.1 Revenues, Expenses and Capital Expenditures. All Hydrocarbons produced prior to
the Effective Time (irrespective of whether payment for the same has been made or received) which
are attributable to the Subject Interests shall belong to Seller, and all such Hydrocarbons
produced from and after the Effective Time shall belong to Buyer. Seller shall be entitled to all
revenues and related accounts receivable attributable to the ownership or operation of the Subject
Interests, and shall be responsible for all costs and expenses and related accounts payable
attributable to the ownership or operation of the Subject Interests, to the extent they relate to
the time prior to the Effective Time. Buyer shall be entitled to all revenues and related accounts
receivable attributable to the ownership of the Subject Interests, and shall be responsible for all
costs and expenses and related accounts payable attributable to the ownership or operation of the
Subject Interests, to the extent they relate to the time from and after the Effective Time. The
actual amounts or values associated with the above shall be accounted for in the preliminary
Closing statement and the Final Accounting Settlement. Buyer shall assume Seller’s suspense funds
associated with the acquired Subject Interests as of the Effective Time, and these funds shall be
accounted for in the Final Accounting Settlement.



     6.2 Taxes. All taxes and assessments, including without limitation, excise, ad valorem,
property, production and severance taxes and any other federal, state and local taxes and
assessments attributable to the ownership or operation of the Subject Interests prior to the
Effective Time shall remain Seller’s responsibility, and all deductions, credits and refunds
pertaining to the aforementioned taxes and assessments, no matter when received, shall belong to
Seller. All taxes and assessments, including without limitation, excise, ad valorem, property,



13









 







production and severance taxes and any other federal, state and local taxes and assessments
attributable to the ownership or operation of the Subject Interests after the Effective Time shall
be Buyer’s responsibility, and all deductions, credits and refunds pertaining to the aforementioned
taxes and assessments, no matter when received, shall belong to Buyer. The actual amounts or
values associated with the above, if any, shall be accounted for in the preliminary Closing
statement and the Final Accounting Settlement. The parties agree that the transaction contemplated
herein is an occasional sale of assets by Seller in which Seller does not trade in the ordinary
course of its business. Accordingly, the parties will take commercially reasonable actions to
establish the occasional sale exemption from any sales tax associated with the transaction
contemplated herein. Notwithstanding the foregoing, Buyer shall be solely responsible for all
transfer, sales, use or similar taxes resulting from or associated with the transaction
contemplated under this Agreement.



     6.3 Obligations and Credits. Any and all prepaid insurance premiums, utility
charges, taxes, rentals and any other prepays, to the extent applicable to periods of time after
the Effective Time and to the extent attributable to the Subject Interests shall be reimbursed to
Seller by Buyer; and accrued payables applicable to periods of time prior to the Effective Time, if
any, and attributable to the Subject Interests shall be the responsibility of Seller. The actual
amounts or values associated with the above shall be accounted for in the preliminary Closing
statement and the Final Accounting Settlement.



     6.4 Gas Imbalances. Seller’s estimate of the aggregate gas imbalance as of the
Effective Time for all the Subject Interests is zero (0) mcf over/under produced (cumulative
working interests), as more particularly set forth for each of the Subject Interests on Exhibit
I. In the event such gas imbalance estimate is revised by Seller prior to Closing, Seller
shall provide Buyer with a revised gas imbalance schedule for all the Subject Interests as of the
Effective Time. There shall be a Purchase Price adjustment at Closing for the volumetric
difference in the estimated and revised imbalance calculated on Seller’s net revenue interest at a
price of $8 per mcf. To the extent that there is any difference between Seller’s actual aggregate
gas imbalance as of the Effective Time and the imbalance position settled at Closing, then an
adjustment shall be made at the $8 per net mcf rate in the Final Accounting Settlement. There
shall be no further gas imbalance adjustments after the Final Settlement Date. In the event of a
Title Defect affecting all or a portion of the Subject Interests, the aggregate gas imbalance shown
above shall be adjusted to take into account the affected Subject Interests. Any Purchase Price
adjustments for gas imbalances shall be made only on those Subject Interests purchased by Buyer.



     6.5 Miscellaneous Accounting.




      6.5.1 A preliminary Closing statement will be prepared for Closing, as provided in
Section 15.1.




      6.5.2 In addition to the items set forth in Sections 6.1 and 6.2, any other amounts due
between Buyer and Seller related to the ownership or operation of the Subject Interests
shall be accounted for in the Final Accounting Settlement.



14









 





     6.6 Final Accounting Settlement. As soon as reasonably practicable, but in no event
later than ninety (90) Days after Closing, Seller shall deliver to Buyer a post-Closing statement
setting forth a detailed final calculation of all post-Closing adjustments applicable to the period
between the Effective Time and the Closing Date (“Final Accounting Settlement”). As soon as
reasonably practicable, but in no event later than thirty (30) Days after Buyer receives the
post-Closing statement, Buyer shall deliver to Seller a written report containing any changes Buyer
proposes to be made to such statement. As soon as reasonably practicable, but in no event later
than thirty (30) Days after Seller receives Buyer’s proposed changes to the post-Closing statement,
the parties shall meet and undertake to agree on the post-Closing adjustments. If the parties fail
to agree on the post-Closing adjustments, resolution shall be handled in accordance with Section
6.8. The date upon which all amounts associated with the Final Accounting Settlement are agreed to
by the parties, whether by decision of the Accounting Referee or otherwise, shall be herein called
the “Final Settlement Date”. Any amounts owed by either party to the other as a result of such
post-Closing adjustments shall be paid within five (5) Business Days after the Final Settlement
Date.



     6.7 Post-Final Accounting Settlement. Any revenues received or costs and expenses
paid by Buyer after the Final Accounting Settlement which are attributable to the ownership or
operation of the Subject Interests prior to the Effective Time shall be billed to or reimbursed to
Seller, as appropriate. Any revenues received or costs and expenses paid by Seller after the Final
Accounting Settlement which are attributable to the ownership or operation of the Subject Interests
after the Effective Time shall be billed to or reimbursed by Buyer, as appropriate.



     6.8 Audit Rights. In order to verify the information provided by the parties under
this Article 6, Buyer and Seller shall each have the right to conduct, at such party’s sole
expense, an audit of the other party’s records relating thereto for a period of one hundred eighty
(180) days after the Closing Date. Objections or exceptions which are not raised within such audit
period shall be conclusively deemed to be waived by the parties for all purposes, and neither party
shall have the right to make a claim against the other party or seek indemnification or
reimbursement from the other party associated with the same. If within such fifteen (15) Days
after receiving the results of a party’s audit conducted in accordance with this Article, the
parties still cannot reach agreement, the disputed items shall be resolved by submitting the same
to PricewaterhouseCoopers, or if such firm declines to act in such capacity, by such other firm of
independent nationally recognized accountants mutually acceptable to the parties (the “Accounting
Referee”). The Accounting Referee shall be instructed to resolve the accounting dispute(s) within
thirty (30) Days after having the relevant materials submitted to it for review. The decision of
the Accounting Referee
shall be binding and non-appealable by the parties. The fees and expenses associated with the
Accounting Referee shall be borne equally by Buyer and Seller.



ARTICLE 7. CASUALTY AND CONDEMNATION




     If a substantial part of the Properties shall be (a) destroyed prior to Closing by a Casualty
Loss, or (b) taken in condemnation or if proceedings for such purposes shall be pending
(collectively referred to as a “Taking”), then either Buyer or Seller may terminate this



15









 







Agreement
prior to the Closing. For the purpose of this Article 6, the term “substantial” shall be defined
as ten percent (10%) of the unadjusted Purchase Price. If either party terminates this Agreement
in accordance with this Section, neither party shall have any further obligations, except as
provided in this Article and in Section 14.2.1.



     If neither party terminates this Agreement, this Agreement shall remain in full force and
effect, and Seller and Buyer shall attempt to agree on a reduction in the Purchase Price,
reflecting the reduction in the value of the Subject Interests affected by the Casualty Loss and/or
Taking. If the parties cannot agree on a reduction, the Buyer’s reasonable good faith calculation
shall be used for purposes of Closing. Notwithstanding anything herein to the contrary, in no
event shall either party have any obligations hereunder with respect to any Casualty Loss and/or
Taking except to the extent that the value of all such Casualty Losses and/or Takings exceed in the
aggregate Three Hundred Ninety Nine Thousand and No/100 Dollars (US $399,000.00), and Buyer hereby
waives all downward adjustments to the Purchase Price for all Casualty Losses and/or Takings the
cumulative value of which is $399,000.00 or less. Unless otherwise agreed by the parties, Seller
shall retain any and all sums paid to Seller, unpaid awards, insurance proceeds and other payments
associated with or attributable to Casualty Losses and/or Takings to the extent that Buyer receives
a downward adjustment to the Purchase Price attributable to such Casualty Losses and/or Takings.
Otherwise, Buyer shall receive any and all sums paid to Seller, unpaid awards, insurance proceeds
and other payments attributable to such Casualty Losses and/or Takings.



ARTICLE 8. INDEMNITIES




     8.1 Seller’s Indemnity Obligations (excluding Environmental Claims). EXCEPT FOR ENVIRONMENTAL CLAIMS WHICH
SHALL BE HANDLED IN ACCORDANCE WITH SECTION 8.3, SELLER SHALL RELEASE BUYER AND BUYER’S
AFFILIATES AND THEIR RESPECTIVE OFFICERS, DIRECTORS AND EMPLOYEES (COLLECTIVELY, THE “BUYER GROUP”)
FROM AND SHALL FULLY PROTECT, INDEMNIFY, AND DEFEND BUYER GROUP FROM AND AGAINST ANY AND ALL CLAIMS
AND ANY AND ALL OCCURRENCES AND CONDITIONS WHICH WOULD CONSTITUTE CLAIMS BUT WHICH ARE ASSERTED BY
SELLER, RELATING TO, ARISING OUT OF, OR CONNECTED WITH SELLER’S OWNERSHIP OR OPERATION OF THE
PROPERTIES PRIOR TO THE EFFECTIVE TIME, REGARDLESS OF ANY NEGLIGENCE OF ACT OR OMISSION BY BUYER
GROUP; PROVIDED,
HOWEVER, THAT PROPER NOTICE UNDER SECTION 8.5 SHALL HAVE BEEN SUBMITTED TO SELLER WITHIN EIGHTEEN
(18) MONTHS AFTER THE CLOSING DATE, AND FURTHER PROVIDED THAT BUYER SHALL BEAR SOLE RESPONSIBILITY
FOR THE COSTS ASSOCIATED WITH ALL SUCH CLAIMS (IN AGGREGATE) UP TO THREE HUNDRED NINETY NINE
THOUSAND AND NO/100DOLLARS (US $399,000.00).



     8.2 Buyer’s Indemnity Obligations (excluding Environmental Claims).
EXCEPT FOR ENVIRONMENTAL CLAIMS WHICH
SHALL BE HANDLED IN ACCORDANCE WITH SECTION 8.3, BUYER SHALL RELEASE SELLER AND



16









 







SELLER’S AFFILIATES
AND THEIR RESPECTIVE OFFICERS, DIRECTORS AND EMPLOYEES (COLLECTIVELY, THE “SELLER GROUP”) FROM AND
SHALL FULLY PROTECT, INDEMNIFY, AND DEFEND THE SELLER GROUP FROM AND AGAINST ANY AND ALL CLAIMS AND
ANY AND ALL OCCURRENCES AND CONDITIONS WHICH WOULD CONSTITUTE CLAIMS BUT WHICH ARE ASSERTED BY
BUYER RELATING TO, ARISING OUT OF, OR CONNECTED WITH THE OWNERSHIP OR OPERATION OF THE PROPERTIES
(i) PERTAINING TO THE PERIOD AFTER THE EFFECTIVE TIME, AND (ii) PERTAINING TO THE PERIOD PRIOR TO
THE EFFECTIVE TIME, UNLESS SUCH CLAIMS OR OCCURRENCES AND CONDITIONS SHALL HAVE BEEN SUBMITTED TO
SELLER IN ACCORDANCE WITH THE NOTICE PROVISIONS HEREOF WITHIN EIGHTEEN (18) MONTHS AND ARE IN THE
AGGREGATE GREATER THAN THREE HUNDRED NINETY NINE THOUSAND AND NO/100 DOLLARS (US $399,000.00). THIS
INDEMNITY SHALL APPLY REGARDLESS OF ANY NEGLIGENCE OF ACT OR OMISSION BY SELLER GROUP.



     8.3 Environmental Claims. BUYER SHALL RELEASE SELLER GROUP
AND SHALL FULLY PROTECT, INDEMNIFY, AND DEFEND SELLER GROUP FROM AND AGAINST ANY AND ALL
ENVIRONMENTAL CLAIMS AND ANY AND ALL OCCURRENCES AND CONDITIONS WHICH WOULD CONSTITUTE
ENVIRONMENTAL CLAIMS BUT WHICH ARE ASSERTED BY BUYER PERTAINING TO THE PROPERTIES, NO MATTER WHEN
THE SAME ARISE OR TO WHAT PERIOD OF TIME THEY PERTAIN AND REGARDLESS OF ANY NEGLIGENCE OR ACT OR
OMISSION OF SELLER GROUP.



     8.4 Asbestos and NORM. The parties acknowledge that the
Properties may contain asbestos and/or NORM, and that special procedures may be required for the
assessment, remediation, removal, transportation or disposal of asbestos and NORM. Buyer agrees to
assume any and all liability associated with or attributable to the assessment, remediation,
removal, transportation and disposal of the asbestos or NORM associated with or attributable to the
Properties and shall conduct said activities in accordance with all applicable Laws.



     8.5 Notice and Cooperation. If a Claim is asserted against
a party for which the party would be liable under the provisions of this Agreement, it is a
condition precedent to the indemnifying party’s
obligations hereunder that the indemnified party gives the indemnifying party written notice of
such Claim setting forth full particulars of the Claim, as known by the indemnified party,
including a copy of the Claim (if it was a written Claim.) The indemnified party shall make a good
faith effort to notify the indemnifying party within one (1) month of receipt of a Claim and shall
in all events effect such notice within such time as will allow the indemnifying party to defend
against such Claim and no later than three (3) calendar months after receipt of the Claim by the
indemnified party. The notice of a Claim given hereunder is referred to as a “Claim Notice.”



17









 





     8.6 Defense of Claims.




      8.6.1 Counsel. Upon receipt of a Claim Notice, the indemnifying party may assume the
defense thereof with counsel selected by the indemnifying party and reasonably satisfactory
to the indemnified party. The indemnified party shall cooperate in all reasonable respects
in such defense. If any Claim involves Claims with respect to which Buyer indemnifies
Seller and also Claims for which Seller indemnifies Buyer, each party shall have the right
to assume the defense of and hire counsel for that portion of the Claim for which it has
liability. The indemnified party shall have the right to employ separate counsel in any
Claim and to participate in the defense thereof, provided the fees and expenses of counsel
employed by an indemnified party shall be at the expense of the indemnified party unless
otherwise agreed between the parties.




      8.6.2 Settlement. If the indemnifying party does not notify the indemnified party
within the earlier to occur of: (a) the time a response is due in the relevant litigation
matter, or (b) three (3) calendar months after receipt of the Claim Notice, that the
indemnifying party elects to undertake the defense thereof, the indemnified party has the
right to defend, at the sole expense of the indemnifying party, the Claim with counsel of
its own choosing, subject to the right of the indemnifying party to assume the defense of
any Claim at any time prior to settlement or final determination thereof at the indemnifying
party’s sole expense. In such event, the indemnified party shall send a written notice to
the indemnifying party of any proposed settlement of any Claim, which settlement the
indemnifying party may accept or reject, in its reasonable judgment, within thirty (30) Days
of receipt of such notice, unless the settlement offer is limited to a shorter period of
time in which case the indemnifying party shall have such shorter period of time in which to
accept or reject the proposed settlement. Failure of the indemnifying party to accept or
reject such settlement within the thirty (30) Day period, or such shorter period of time, if
applicable, shall be deemed to be its rejection of such settlement. The indemnified party
may settle any matter over the objection of the indemnifying party but shall in so doing be
deemed to have waived any right to indemnity therefor as to (and only as to) liabilities
with respect to which the indemnifying party has recognized its liability.



     8.7 Waiver of Certain Damages. Each of the parties
hereby waives, and agrees not to seek, indirect, consequential, punitive, exemplary or special
damages of any kind with respect to any Claim, occurrence, condition or dispute, arising out of or
relating to this Agreement or breach hereof; provided, however,
that this provision does not diminish or affect in any way the parties’ rights and obligations
under any indemnities provided for in this Agreement.



     8.8. Limitation on Indemnities. In no event shall an
indemnifying party have any obligation of indemnification to the other party, if the Claim,
occurrence, condition or dispute for which indemnity is sought was caused by the gross negligence
or willful misconduct on the part of the indemnified party and/or its officers, directors,
employees, agents, contractors, subcontractors or Affiliates.



18









 





ARTICLE 9. WARRANTIES AND DISCLAIMERS




     9.1 Special Warranty of Title. Seller shall warrant and defend title to the
Properties conveyed to Buyer against every person whomsoever lawfully claiming the same or any part
thereof by, through or under Seller, but not otherwise, and subject to the Permitted Encumbrances.



     9.2 Disclaimer — Representations and Warranties. BUYER ACKNOWLEDGES AND AGREES THAT
THE SUBJECT INTERESTS ARE BEING SOLD, ASSIGNED AND CONVEYED FROM SELLER TO BUYER “AS-IS, WHERE-IS”,
AND WITH ALL FAULTS IN THEIR PRESENT CONDITION AND STATE OF REPAIR, WITHOUT RECOURSE. EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT, SELLER HEREBY DISCLAIMS ANY AND ALL REPRESENTATIONS AND
WARRANTIES CONCERNING THE SUBJECT INTERESTS, EXPRESS, STATUTORY, IMPLIED OR OTHERWISE, INCLUDING
WITHOUT LIMITATION, ANY WARRANTY OF TITLE, THE QUALITY OF HYDROCARBON RESERVES, THE QUANTITY OF
HYDROCARBON RESERVES, THE AMOUNT OF REVENUES, THE AMOUNT OF OPERATING COSTS, CONDITION (PHYSICAL OR
ENVIRONMENTAL), QUALITY, COMPLIANCE WITH APPLICABLE LAWS, ABSENCE OF DEFECTS (LATENT OR PATENT),
SAFETY, STATE OF REPAIR, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND BUYER EXPRESSLY
RELEASES SELLER FROM THE SAME.



     9.3 Disclaimer — Statements and Information. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, SELLER DISCLAIMS ANY AND ALL LIABILITY AND RESPONSIBILITY FOR AND ASSOCIATED WITH THE
QUALITY, ACCURACY, COMPLETENESS OR MATERIALITY OF THE RECORDS AND ANY OTHER INFORMATION PROVIDED AT
ANY TIME (WHETHER ORAL OR WRITTEN) TO BUYER, ITS OFFICERS, AGENTS, EMPLOYEES AND REPRESENTATIVES IN
CONNECTION WITH THE TRANSACTION CONTEMPLATED HEREIN, INCLUDING WITHOUT LIMITATION, QUALITY OF
HYDROCARBON RESERVES, QUANTITY OF HYDROCARBON RESERVES, AMOUNT OF REVENUES, AMOUNT OF OPERATING
COSTS, FINANCIAL DATA, CONTRACT DATA, ENVIRONMENTAL CONDITION OF THE PROPERTIES, PHYSICAL CONDITION
OF THE PROPERTIES AND CONTINUED FINANCIAL VIABILITY OF THE
SUBJECT INTERESTS, AND BUYER EXPRESSLY RELEASES SELLER FROM THE SAME.



ARTICLE 10. SELLER’S REPRESENTATIONS




     Seller represents to Buyer that on the date hereof and as of the Closing Date:



     10.1 Organization and Good Standing. Seller is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware, and has all requisite



19









 







corporate power and authority to own and lease the Properties. Seller is duly licensed or
qualified to do business as a foreign corporation and is in good standing in all jurisdictions in
which the Properties are located.



     10.2 Corporate Authority; Authorization of Agreement. Seller has all requisite
corporate power and authority to execute and deliver this Agreement, to consummate the transactions
contemplated herein and to perform all of the terms and conditions to be performed by it as
provided for in this Agreement. The execution and delivery of this Agreement by Seller, the
performance by Seller of all of the terms and conditions to be performed by it and the consummation
of the transactions contemplated herein have been duly authorized and approved by all necessary
corporate action. This Agreement has been duly executed and delivered by Seller and constitutes
the valid and binding obligation of Seller, enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency or other Laws relating to or
affecting the enforcement of creditors’ rights and general principles of equity (regardless of
whether such enforceability is considered in a proceeding at law or in equity).



     10.3 No Violations. The execution and delivery of this Agreement by Seller does not,
and the fulfillment and compliance with the terms and conditions hereof and the consummation of the
transactions contemplated herein, will not:




        (a) Conflict with or require the consent of any person or entity under any of the
terms, conditions or provisions of the certificate of incorporation or bylaws of Seller;




        (b) Violate any provision of, or require any filing, consent or approval under any Law
applicable to or binding upon Seller (assuming receipt of all consents and approvals of
governmental entities customarily obtained subsequent to the transfers of title);




        (c) Conflict with, result in a breach of, constitute a default under or constitute an
event that with notice or lapse of time, or both, would constitute a default under,
accelerate or permit the acceleration of the performance required by, or require any
consent, authorization or approval under, (i) any mortgage, indenture, loan, credit
agreement or other agreement, evidencing indebtedness for borrowed money to which
Seller is a party or by which Seller is bound or (ii) any order, judgment or decree of any
governmental entity or tribal authority; or




        (d) Result in the creation or imposition of any lien or encumbrance upon the Subject
Interests.



     10.4 Absence of Certain Changes. Between the Effective Time and the execution date
hereof, there has not been:




        (a) A sale, lease or other disposition of any material part of the Subject Interests,
other than the sale of Hydrocarbons in the ordinary course of business, consistent with
prior practices of Seller;



20









 






        (b) A mortgage, pledge or grant of a lien or security interest in any of the Subject
Interests; or




        (c) A contract or commitment to do any of the foregoing.



     10.5 Operating Costs. To the best of Seller’s knowledge, all costs incurred in
connection with the operation of the Subject Interests have been fully paid and discharged by
Seller, except normal expenses incurred in operating the Subject Interests within the previous
sixty (60) Days or as to which Seller has not yet been billed or as to which Seller is disputing in
good faith.



     10.6 Litigation and Other Disputes. Seller shall retain liability for the matters
listed on Schedule 10.6 and shall indemnify, defend and hold harmless the Buyer Group from
and against any and all Claims related to such matters. Except for the matters listed on
Schedule 10.6, there is no action, suit or proceeding pending or, to the best of Seller’s
knowledge, threatened against the Properties or Seller’s interest in the Properties.



     10.7 Bankruptcy. There are no bankruptcy, reorganization or receivership proceedings pending,
being contemplated by or, to the best of Seller’s knowledge, threatened against Seller.



     10.8 Leases. To the best of Seller’s knowledge, (i) the Leases have been maintained in
material compliance with their terms, are valid, binding and in full force and effect, (ii) there
are no defaults by Seller in the performance of any of the material terms and conditions of the
Leases and (iii) no event has occurred that with the lapse of time or action or inaction by any
party would result in a material violation of the Leases or a default thereunder. To the best of
Seller’s knowledge, all royalties (including shut-in payments), rental, deposits and other amounts
due on the Leases have been properly and timely paid.



     10.9 Hydrocarbon Sales; Imbalances. Except as otherwise provided in Section 6.4,
Seller has not been nor will Buyer after the Effective Time be obligated by virtue of any
prepayment made under any gas transportation,
production sales contract or any other contract containing a “take or pay” clause, or under any gas
balancing, deferred production or similar arrangement to deliver oil, gas or other minerals
produced from or allocated to any of the Subject Interests at such future time without receiving
full payment therefor at the time of delivery.



     10.10 Existing Commitments. Except as described on
Schedule 10.10 and except for any commitment for expenditures of less than $50,000, there
are no existing commitments or obligations to pay costs or expenses for drilling, completing,
equipping, deepening, side tracking, reworking or other similar costs or expenses arising from or
relating to the ownership of the Properties. Except as otherwise provided in the Assumed
Contracts, there are no obligations or commitments presently existing under which Seller’s interest
in the Properties will be altered due to the passage of time, the collection of a specified sum of
money (including, for example, non-consent operations and back-in obligations) or other reason.



21









 





     10.11 Compliance with Law. Except for those matters
disclosed on Schedule 10.11 and such other matters as would not have a material adverse
effect on the value of the Properties, to the best of Seller’s knowledge, Seller (i) is in material
compliance with all Laws applicable to Seller or the Properties and (ii) has not received notice of
and is not aware of any facts, conditions or circumstances relating to the ownership or operation
of the Properties that could reasonably be expected to give rise to any claim or assertion that
Seller, the Properties or the ownership or operation thereof is not in material compliance with any
Law applicable to Seller or the Properties.



     10.12 Availability of Records. To the best of Seller’s knowledge, Seller has provided
Buyer with access to all Records in Seller’s possession in connection with Buyer’s due diligence
title review of the Leases.



     10.13 Material Contracts. Exhibit D sets forth, to the best of Seller’s
knowledge after reasonable investigation, all contracts and agreements that have a material effect
on the use, value or operation of the Properties. Except as set forth on Schedule 10.13,
the Material Contracts are in full force and effect in accordance with their respective terms,
there exist no defaults thereunder by Seller or, to the best of Seller’s knowledge after reasonable
investigation, by any other party to such Material Contracts and no event has occurred that with
notice or lapse of time or both would constitute any default under any such contract by Seller or,
to the best of Seller’s knowledge after reasonable investigation, any other party to such Material
Contracts.



     10.14 Preferential Rights. Except as set forth on Schedule 10.14, to the best
of Seller’s knowledge there are no preferential rights to purchase that are applicable to the
transaction contemplated hereby.



     10.15 Environmental. Except as set forth on Schedule 10.15, to the best of
Seller’s knowledge, neither Seller nor the Properties are in violation of any Environmental Laws
and there are no existing Environmental Claims relating to the Properties.



     10.16 Suspense Accounts. As of the Effective Time, to the best of Seller’s knowledge
and except as set forth in Schedule 10.16, with respect to the Properties operated by
Seller, Seller is not holding any funds in suspense.



     10.17 Expenses and Costs and Payments Out of Production. All expenses and costs
(including all bills for labor, materials and supplies used or furnished for use in connection with
the Properties) and payments out of production of hydrocarbons from the Properties, including all
royalties, have been, and are being, properly and timely paid.



     10.18 Payout Balances. Schedule 10.18 contains the true and correct payout
balances as of the most recent period in Seller’s possession for each of the Properties that have
varying interests depending on payout or other occurrence.



     10.19 Use of Surface. Except as set forth on Schedule 10.19, to the best of
Seller’s knowledge after reasonable investigation there is no material limitation on the use of the
surface contained in any of the Leases that would have a material adverse effect on the value, use
or



22









 







operation of the Properties. The Assumed Contracts are sufficient for reasonable access to all
of the Properties.



     10.20 Statements. No representation made by Seller in this Agreement, and no
statement of Seller or Seller’s agents or representatives contained in any document, certificate,
or other writing furnished or to be furnished to Buyer by Seller pursuant hereto or in connection
herewith, intentionally contains or will intentionally contain, at the time of delivery, any untrue
statement of a material fact or intentionally omit or will intentionally omit, at the time of
delivery, to state any material fact necessary in order to make the statements contained therein,
in light of the circumstances under which they are made, not misleading. Seller knows of no matter
which has not been disclosed to Buyer pursuant to this Agreement which has or, so far as Seller can
now reasonably foresee, will have a material adverse effect on the value, use or operation of the
Assets. Seller has delivered or made available to Buyer accurate and complete copies of all
agreements, documents, and other writings referred to or listed in this Agreement.



     10.21. Limitation on Representations. The representations contained in Sections 10.5
through 10.20 shall survive Closing for a period of twelve (12) months after the Closing Date and
shall thereupon terminate.



ARTICLE 11. BUYER’S REPRESENTATIONS




     Buyer represents to Seller that on the date hereof and as of the Closing Date:



     11.1 Organization and Good Standing. Parallel Petroleum Corporation is a corporation
duly organized validly existing and in good standing under the Laws of the State of Delaware and
has all requisite corporate power and authority to own and lease the Properties. Parallel
Petroleum Corporation is duly licensed or
qualified to do business as a foreign corporation and is in good standing in all jurisdictions in
which the Properties are located.



     11.2 Corporate Authority; Authorization of Agreement. Parallel Petroleum Corporation
has all requisite corporate power and authority to execute and deliver this Agreement, to
consummate the transactions contemplated herein and to perform all the terms and conditions to be
performed by it as provided for in this Agreement. The execution and delivery of this Agreement by
Parallel Petroleum Corporation, the performance by Parallel Petroleum Corporation of all the terms
and conditions to be performed by it and the consummation of the transactions contemplated herein
have been duly authorized and approved by all necessary corporate action. This Agreement has been
duly executed and delivered by Buyer and constitutes the valid and binding obligation of Buyer,
enforceable against it in accordance with its terms, except as such enforceability may be limited
by bankruptcy, insolvency or other Laws relating to or affecting the enforcement of creditors’
rights and general principles of equity (regardless of whether such enforceability is considered in
a proceeding at law or in equity).



     11.3 No Violations. The execution and delivery of this Agreement by Buyer does not,
and the fulfillment and compliance with the terms and conditions hereof and the consummation of the
transactions contemplated herein, do not:



23









 






        (a) Conflict with or require the consent of any person or entity under any of the
terms, conditions or provisions of the certificate of incorporation or bylaws of Buyer;




        (b) Violate any provision of, or require any filing, consent or approval under any Law
applicable to or binding upon Buyer; or




        (c) Conflict with, result in a breach of, constitute a default under or constitute an
event that with notice or lapse of time, or both, would constitute a default under,
accelerate or permit the acceleration of the performance required by, or require any
consent, authorization or approval under, (i) any mortgage, indenture, loan, credit
agreement or other agreement evidencing indebtedness for borrowed money to which Buyer is a
party or by which Buyer is bound, or (ii) any order, judgment or decree of any governmental
entity or tribal authority.



     11.4 SEC Disclosure. Buyer is an experienced and knowledgeable investor and operator
in the oil and gas business. Buyer is acquiring the Subject Interests for its own account for use
in its trade or business, and not with a view toward or for sale in connection with any
distribution thereof, nor with any present intention of making a distribution thereof within the
meaning of the Securities Act of 1933, as amended.



     11.5 Statements. No representation made by Buyer in this Agreement, and no statement
of Buyer or Buyer’s agents or representatives contained in any document, certificate, or other
writing furnished or to be furnished to Seller by Buyer pursuant hereto or in connection herewith,
intentionally contains or will intentionally contain, at the time of delivery, any untrue statement
of a material fact or intentionally omit or will intentionally omit, at the time of
delivery, to state any material fact necessary in order to make the statements contained
therein, in light of the circumstances under which they are made, not misleading. Buyer knows of
no matter which has not been disclosed to Seller pursuant to this Agreement which has or, so far as
Buyer can now reasonably foresee, will have a material adverse effect on the value, use or
operation of the Assets.



     11.6 Independent Evaluation. As of Closing, Buyer represents that it is sophisticated
in the evaluation, purchase, operation and ownership of oil and gas properties and that in making
its decision to enter into this Agreement and to consummate the transaction contemplated herein,
Buyer has relied and shall rely solely on its own independent knowledge, investigation and
evaluation of the Subject Interests and has satisfied itself as to the physical condition and
environmental condition of the Subject Interests.



     11.7 Buyer’s Reliance. Buyer acknowledges and agrees that it is entitled to rely only
on the express representations and warranties set forth in this Agreement.



     11.8 Qualified Buyer. Buyer possesses all required governmental licenses, permits,
bonds, certificates, orders and authorizations necessary to own the Subject Interests, except those
customarily obtained after the sale or conveyance of the Subject Interests.




24











 





ARTICLE 12. ADDITIONAL AGREEMENTS




     12.1 Covenants of Seller. From the date hereof until Closing, without first obtaining
the consent of Buyer, Seller has not and will not:




        (a) waive any right of material value relating to the Properties;




        (b) convey, encumber, mortgage or pledge any of the Properties nor dispose of any of
the Properties, other than the sale of production in the ordinary course of business and
except as may be required in connection with the exercise of preferential rights affecting
the Properties;




        (c) enter into, modify or terminate any contracts relating to the Properties including
any agreement creating a tax partnership, other than in the ordinary course of business;




        (d) vote to commit to any material project or material expenditure under any operating
agreement affecting the Properties or elect to participate in any operation on the
Properties requiring an expenditure of greater than Fifty Thousand Dollars (US $50,000) to
Seller’s interest, except to the extent required in an emergency to protect life or property
from immediate harm or destruction; or




        (e) contract or commit itself to do any of the foregoing.



     12.2 Notice of Loss. From the date hereof until Closing, Seller shall promptly notify
Buyer of any loss or damage to the Properties, or any part thereof, known to Seller and in the
aggregate exceeding Ten Thousand Dollars (US $10,000) net to Seller’s interest.



     12.3 Subsequent Operations. Seller makes no representations or warranties to Buyer as
to the transferability or assignability of operatorship of the Properties. Buyer acknowledges that
the rights and obligations associated with operatorship of the Properties are governed by the
applicable agreement(s) and that operatorship of the Properties shall be decided in accordance with
the terms of said agreement(s); provided, however, Seller agrees to provide reasonable assistance
to Buyer (at no expense to Seller) in connection with Buyer’s effort to be designated as operator
of the Properties.



     12.4 Buyer’s Assumption of Obligations. Subject to Closing, Buyer agrees to assume
and shall timely perform and discharge all duties and obligations of Seller relating to or arising
out of the ownership of the Properties from and after the Effective Time, including, without
limitation, all duties and obligations of Seller under all the Assumed Contracts, and Buyer shall
indemnify and hold Seller harmless from and against any and all liabilities of whatsoever nature
arising out of Buyer’s failure to properly perform or discharge such duties and obligations. Buyer
agrees to accept full responsibility for Seller’s proportionate share of the costs and expenses
associated with or attributable to the plugging and abandonment of all wells, and the



25









 







removal of all equipment, platforms and facilities conveyed to Buyer under this Agreement and the
remediation, restoration and clean up of the Properties. In conducting the duties and obligations
contained in this Section 12.4, Buyer shall comply with the applicable Laws of all governmental
entities and tribal authorities having appropriate jurisdiction.



     12.5 Records. Within thirty (30) Days after Closing, Seller shall furnish to Buyer all
Records which are maintained by Seller, provided, however, that Seller is entitled to retain copies
of any or all such Records. Buyer agrees to maintain the Records received from Seller, and any
other records that Buyer may receive from the current operators of any of the Properties, in
accordance herewith for a period of six (6) years after the Closing Date and to afford Seller
reasonable access to as requested by Seller. If Buyer desires to dispose of any such records prior
to the end of the six (6) year period, Buyer shall offer in writing to Seller to deliver such
records to Seller; if Seller elects not to receive such records or fails to respond to Buyer’s
notice within thirty (30) Business Days after receipt thereof, then Buyer may dispose of such
records within its discretion.



ARTICLE 13. CONDITIONS PRECEDENT TO CLOSING




     13.1 Conditions Precedent to Seller’s Obligation to Close. Seller shall be obligated
to consummate the sale of the Subject Interests as contemplated by this Agreement on the Closing
Date, provided the following conditions precedent have been satisfied or have been waived by
Seller:




     13.1.1 All representations and warranties of Buyer contained in this Agreement shall be
true and correct in all material respects at and as of Closing as though such
representations and warranties were made at and as of such time;




     13.1.2 Buyer shall have complied in all material respects with all obligations and
conditions contained in this Agreement to be performed or complied with by Buyer at or prior
to the Closing; and




     13.1.3 No suit, action or other proceedings shall be pending before any court or
governmental entity in which it is sought by a person or entity (other than the parties
hereto or any of their Affiliates, officers, directors, or employees) to restrain, enjoin
or otherwise prohibit the consummation of the transactions contemplated by this Agreement,
or to obtain substantial damages in connection with the transaction contemplated herein, nor
shall there be any investigation by a governmental entity pending which might result in any
such suit, action or other proceedings seeking to restrain, enjoin or otherwise prohibit the
consummation of the transaction contemplated by this Agreement.



     13.2 Conditions Precedent to Buyer’s Obligation to Close. Buyer shall be obligated to
consummate the purchase of the Subject Interests as contemplated by this Agreement on the Closing
Date, provided that the following conditions precedent have been satisfied or have been waived by
Buyer:



26









 






     13.2.1 All representations and warranties of Seller contained in this Agreement shall
be true and correct in all material respects at and as of Closing as though such
representations and warranties were made at and as of such time;




     13.2.2 Seller shall have complied in all material respects with all obligations and
conditions contained in this Agreement to be performed or complied with by Seller at or
prior to the Closing; and




     13.2.3 No suit, action or other proceedings shall be pending before any court or
governmental entity in which it is sought by a person or entity (other than the parties
hereto or any of their Affiliates, officers, directors, or employees) to restrain, enjoin or
otherwise prohibit the consummation of the transactions contemplated by this Agreement, or
to obtain substantial damages in connection with the transaction contemplated herein, nor
shall there be any investigation by a governmental entity pending which might result in any
such suit, action or other proceedings seeking to restrain, enjoin or otherwise prohibit the
consummation of the transaction contemplated by this Agreement.



ARTICLE 14. TERMINATION




     14.1 Grounds for Termination. This Agreement may be terminated at any time prior to
Closing:




     14.1.1 By the mutual written agreement of Seller and Buyer;




     14.1.2 By Seller if Buyer fails or refuses to Close in breach of this Agreement or if
the conditions precedent to Seller’s obligation to Close are unmet at the time set for
Closing;




     14.1.3 By Buyer if Seller fails or refuses to Close in breach of this Agreement or if
the conditions precedent to Buyer’s obligation to Close are unmet at the time set forth
Closing;




     14.1.4 By either Seller or Buyer pursuant to Article 5; or




     14.1.5 By either party (provided the terminating party is not then in breach of any
provisions of this Agreement), if Closing shall not have occurred within sixty (60) days
following the originally scheduled Closing Date.



     14.2 Effect of Termination.




     14.2.1 Except as provided in Section 14.2.2 below, if this Agreement is terminated in
accordance with Section 14.1, such termination shall be without liability of either party or
any Affiliate, officer, director, or employee of such party, except for



27









 







Seller’s obligation (if applicable) to return the Earnest Money Deposit, as provided in
Article 3, and the obligations provided in Sections 14.4 and 16.3.



       14.2.2 If this Agreement is terminated because of Buyer’s failure or refusal to Close
in breach of this Agreement or because the conditions precedent to Seller’s obligation to
Close provided in Sections 13.1.1 and 13.1.2 are unmet at the time set for Closing, Seller
shall be entitled to retain the Earnest Money Deposit as liquidated damages to reimburse
Seller for its out-of-pocket fees and expenses incurred in connection with the transactions
contemplated by this Agreement, unless any of the conditions precedent to Buyer’s obligation
to Close provided in Section 13.2 are also unmet at the time set for Closing. The
liquidated damages referenced above shall be in addition to and not exclusive of any other
remedies which may be available to Seller at law or in equity. If this Agreement is
terminated because of Seller’s failure or refusal to Close in breach of this Agreement or
because the conditions precedent to Buyer’s obligation to Close provided in Sections 13.2.1
and 13.2.2 are unmet at the time set for Closing, Buyer shall be entitled to all remedies
which may be available to Buyer at law or in equity.



     14.3 Return of Documents. If this Agreement is terminated, each party shall return to
the party which owns or is otherwise entitled thereto all books, records, maps, files, papers and
other property in such party’s possession relating to the transaction contemplated by this
Agreement.



     14.4 Confidentiality. Buyer acknowledges that the books, records, maps, files, papers and
other property to be disclosed to Buyer in the performance of its title due diligence hereunder may
contain non-public confidential information and that Seller considers the terms of the sale and
purchase of the Subject Interests to be confidential information. Buyer agrees that it will use
such confidential information solely for the purpose of performing such due diligence and that such
information will be kept confidential by Buyer for a period of one (1) year from the date hereof in
the event that Closing does not occur..



     This Section 14.4 shall be inoperative as to such portions of the information furnished Buyer
that (i) are or become generally available to the public other than as a result of a disclosure by
Buyer or its representatives in breach of the terms hereof; (ii) are or become available to Buyer
from a source other than the Seller, if such source has represented to Buyer (and which Buyer has
no reason to disbelieve after due inquiry) that it is entitled to disclose such information; (iii)
are developed independently by Buyer without reference to such information; (iv) were known to
Buyer prior to their disclosure by the Companies or one of their representatives; or (v) which
Buyer had a prior independent contractual right to receive, with or without an obligation of
confidentiality.



     In the event that Buyer is requested or becomes legally compelled (by oral question,
interrogatory, request for information or documents, subpoena, civil investigative demand or
similar process) to disclose any of the confidential information, Buyer will (i) provide Seller
with prompt written notice so that Seller may seek a protective order or other appropriate remedy
and/or waive compliance with the provisions of this letter agreement, and (ii) cooperate with
Seller in pursuing any reasonable measures that Seller determines to pursue to resist or narrow any
such disclosure request or requirement. In the event that such protective order or other



28









 







remedy is not obtained, or Seller waives compliance with the provisions of this letter agreement,
Buyer will furnish only that portion of the confidential that is legally required and will exercise
all reasonable efforts to obtain confidential treatment therefor and will cooperate with Seller’s
efforts to obtain such confidential treatment.



ARTICLE 15. THE CLOSING




     15.1. Preliminary Closing Statement. Prior to the Closing Date, Seller shall provide
Buyer with a preliminary Closing statement setting forth the adjusted Purchase Price, the amounts
required in Sections 6.1-6.3 hereof, and wiring instructions designating the account or accounts to
which the adjusted Purchase Price is to be delivered in accordance with Section 15.3.2. After
receipt of the preliminary Closing statement from Seller and prior to the Closing Date, Buyer shall
furnish Seller with Buyer’s requested adjustments to such statement. Seller and Buyer shall
attempt in good faith to resolve any differences between them, but if the parties are unable to
agree, Seller’s preliminary Closing statement shall be used for Closing.



     15.2 Obligations of Seller at Closing. At the Closing, Seller shall deliver to Buyer,
unless waived by Buyer, the following:




        15.2.1 Documents substantially in the form of the Assignment and Bill of Sale attached
hereto as Exhibit A, conveying all of Seller’s right, title and interest in and to
the Properties. The Assignment and Bill of Sale shall be executed and acknowledged in two
(2) multiple originals or such greater number as agreed between the parties;




        15.2.2 Evidence that all consents and approvals prerequisite to the sale and conveyance
of the Subject Interests (except for consents and approvals of governmental entities
customarily obtained subsequent to the transfer of title or with respect to Properties which
have been withdrawn from the transaction in accordance with the terms hereof) have been
obtained, as well as evidence of waiver or lapse of any unexercised preferential purchase
rights applicable to the Properties;




        15.2.3 A Certificate substantially in the form of Exhibit B, executed by an
authorized officer of Seller, certifying as to the matters specified in Section 13.2.1;




        15.2.4 A Non-Foreign Affidavit substantially in the form of Exhibit E, executed
by an authorized officer of Seller;




        15.2.5 Executed copies of mutually agreeable transfer orders or letters-in-lieu,
government approved assignment forms to be prepared by Buyer; and




        15.2.6 Such other instruments as are necessary to carry out Seller’s obligations under
this Agreement.



     15.3 Obligations of Buyer at Closing. At the Closing, Buyer shall deliver to Seller,
unless waived by Seller, the following:



29









 




     15.3.1 The Assignment and Bill of Sale referred to in Section 15.2.1, executed and
properly acknowledged;


     15.3.2 The adjusted Purchase Price, less the Earnest Money Deposit, by wire transfer in
accordance with Article 3;


     15.3.3 A Certificate substantially in the form of Exhibit B, executed by an
authorized representative of Buyer, certifying as to the matters specified in Section
13.1.1; and


     15.3.4 Such other instruments as are necessary to carry out Buyer’s obligations under
this Agreement.


     15.4 Site of Closing. Closing shall be held in Seller’s offices in Houston, Texas or
any other location mutually agreed in writing by Seller and Buyer.


ARTICLE 16. MISCELLANEOUS


     16.1 Notices. All notices and other communications required, permitted or desired to be given
hereunder must be in writing and sent by U.S. mail, properly addressed as shown below, and with all
postage and other charges fully prepaid or by hand delivery or by facsimile transmission. Date of
service by mail and hand delivery is the date on which such notice is received by the addressee and
by facsimile is the date sent (as evidenced by fax machine confirmation of receipt), or if such
date is not on a Business Day, then on the next date which is a Business Day. Each party may
change its address by notifying the other party in writing.


	 	 	 
	If to Seller by mail or hand delivery:
	 	Diamond “M” Production Company


2350 N. Sam Houston Pkwy. E., Suite 125


Houston, Texas 77032


Attention: Jim Dewbre 
	 	 	 
	If to Seller by facsimile:	 	

Diamond “M” Production Company


Number: 281-618-4885


Attention: Jim Dewbre
	 	 	 
	If to Buyer by mail or hand delivery:	 	Parallel Petroleum Corporation


1004 North Big Spring, Suite 400


Midland, Texas 79701


Attention: John Rutherford
	 	 	 
	 	 	Ted Collins, Jr.

508 W. Wall Street, Suite 1200


Midland, Texas 79701




30








 






	 	 	 
	If to Buyer
by facsimile:

	 	Parallel Petroleum Corporation

Number: 432-684-7867

Attention: John Rutherford
	 
	 	 
	 

	 	Ted Collins, Jr.


Number: 432-686-0302


Attention: Ted Collins, Jr.






     16.2 Conveyance Costs. Buyer shall be solely responsible for filing and recording
documents related to the transfer of the Properties from Seller to Buyer and for all costs and fees
associated therewith, including filing the assignment of the Properties with appropriate federal,
state and local authorities as required by applicable Law. Promptly following Buyer’s receipt of
the recorded documents, Buyer shall furnish Seller with all recording data and evidence of all
required filings.



     16.3 Brokers’ Fees. Neither party has retained any brokers, agents or finders in
connection with this transaction that would result in any liability on the other party for any fees
or commission. Each party agrees to release, protect, indemnify, defend and hold the other
harmless from and against any and all Claims with respect to any commissions, finders’ fees or
other remuneration due to any broker, agent or finder claiming by, through or under such party.



     16.4 Further Assurances. From and after Closing, at the request of Seller but without
further consideration, Buyer will execute and deliver or use reasonable efforts to cause to be
executed and delivered such other instruments of conveyance and take such other actions as Seller
reasonably may request to more effectively put Seller in possession of any property which was not
intended by the parties to be conveyed by Buyer. From and after Closing, at the request of Buyer
but without further consideration, Seller shall execute and deliver or use reasonable efforts to
cause to be executed and delivered such other instruments of conveyance and take such other actions
as Buyer reasonably may request to more effectively put Buyer in possession of the Subject
Interests. If any of the Properties are incorrectly described, the description shall be corrected
upon proof of the proper description.



     16.5 Survival of Representations and Warranties. Unless otherwise expressly limited
herein, all representations, warranties, indemnities, covenants and agreements contained in this
Agreement, to the extent not fully performed or waived prior to Closing, shall survive the Closing
indefinitely. The parties have made no representations or warranties except those expressly set
forth in this Agreement.



     16.6 Amendments and Severability. No amendments or other changes to this Agreement
shall be effective or binding on either of the parties unless the same shall be in writing and
signed by both Seller and Buyer. The invalidity of any one or more provisions of this Agreement
shall not affect the validity of this Agreement as a whole, and in case of any such invalidity,
this Agreement shall be construed as if the invalid provision had not been included herein.



31









 





     16.7 Successors and Assigns. This Agreement shall not be assigned, either in whole or
in part, without the prior express written consent of the non-assigning party. Assignment of this
Agreement by either party shall not relieve the assigning party of liability hereunder in the event
of non-performance or breach of this Agreement by such party’s assignee. The terms, covenants and
conditions contained in this Agreement shall be binding upon and shall inure to the benefit of
Seller and Buyer and their respective successors and assigns, and such terms, covenants and
conditions shall be covenants running with the land and with each subsequent transfer or assignment
of the Subject Interests.



     16.8 Headings. The titles and headings set forth in this Agreement have been included solely
for ease of reference and shall not be considered in the interpretation or construction of this
Agreement.



     16.9 Governing Law. This Agreement shall be governed by and construed under the Laws
of the State of Texas, excluding any choice of law rules which may direct the application of the
Laws of another jurisdiction. This provision survives termination of this Agreement.



     16.10 No Partnership Created. It is not the purpose or intention of this Agreement to
create (and it shall not be construed as creating) a joint venture, partnership or any type of
association, and the parties are not authorized to act as agent or principal for each other with
respect to any matter related hereto.



     16.11 Public Announcements. Neither the Seller Group nor the Buyer Group (as defined
in Article 8) shall issue a public statement or press release with respect to the transaction
contemplated herein (including the price and other terms) without the prior written consent of the
other party, except as required by Law or listing agreement with a national security exchange and
then only after prior consultation with the other party.



     16.12 No Third Party Beneficiaries. Nothing contained in this Agreement shall entitle
anyone other than Seller or Buyer or their authorized successors and assigns to any claim, cause of
action, remedy or right of any kind whatsoever.



     16.13 Deceptive Trade Practices. As partial consideration for the parties agreeing to
enter into this Agreement, the parties each can and do expressly waive the provisions of all
consumer protection Laws of the State of Texas, or any other state, applicable to this transaction
that may be waived by the parties; it is not the intent of the parties to waive and the parties
shall not waive any applicable Law or provision thereof which is prohibited by Law from being
waived. Each party represents to the other that such party has had an adequate opportunity to
review the preceding waiver provision, including the opportunity to submit the same to legal
counsel for review and comment, and understands the rights being waived herein.



     16.14 Tax Deferred Exchange Election. Either party may elect to structure the
conveyance of the Subject Interests as part of an exchange under Article 1031 of the Internal
Revenue Code of 1986, as amended. The parties agree to execute all documents, conveyances or



32









 







other instruments necessary to effectuate an exchange. The party requesting that the transaction
be structured as a tax free exchange shall be responsible for all additional costs associated with
so structuring the transaction.



     16.15 Not to be Construed Against Drafter. The parties acknowledge that they have had
an adequate opportunity to review each and every provision contained in this Agreement and to
submit the same to legal counsel for review and comment, including expressly but without limitation
the waivers and indemnities in Articles 4, 5, 7, 8, and 16. Based on said review and consultation,
the parties agree with each and every term contained in this Agreement. Based on the foregoing,
the parties agree that the rule of construction that a contract be construed against the drafter,
if any, shall not be applied in the interpretation and construction of this Agreement.



     16.16 Entire Agreement. This Agreement supersedes all prior negotiations,
understandings, letters of intent and agreements (whether oral or written) and any contemporaneous
oral agreements between the parties relating to the Subject Interests and constitutes the entire
understanding and agreement between the parties with respect to the sale and purchase of the
Subject Interests.



     16.17 Conspicuousness of Provisions. The parties acknowledge that the provisions
contained in this Agreement that are set out in “bold” satisfy the requirement of the express
negligence rule and any other requirement at law or in equity that provisions contained in a
contract be conspicuously marked or highlighted.



     16.18 Execution in Counterparts. This Agreement may be executed in counterparts,
which shall when taken together constitute one valid and binding agreement.



     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the dates
of their respective acknowledgments set forth below, to be effective, however, as of the Effective
Time.



	 	 	 	 	 
	 	 	DIAMOND “M” PRODUCTION COMPANY
	 
	 	 	 	 
	 

	 	By:
	 	         /s/ Richard F. Lane
	 

	 	 	 	 
	 

	 	Name:
	 	Richard F. Lane
	 

	 	Title:
	 	President






33









 






	 	 	 	 	 
	 	 	PARALLEL PETROLEUM CORPORATION
	 
	 	 	 	 
	 

	 	By:
	 	         /s/ John S. Rutherford
	 

	 	 	 	 
	 

	 	Name:
	 	John S. Rutherford
	 

	 	Title:
	 	Vice President
	 
	 	 	 	 
	 	 	TED COLLINS, JR.
	 
	 	 	 	 
	 

	 	By:
	 	         /s/ J. Randy Turner
	 

	 	 	 	 
	 

	 	Name:
	 	J. Randy Turner, as Agent and Attorney-in-Fact for
	 

	 	 	 	Ted Collins, Jr.






34









 





SCHEDULE 10.6




To Purchase and Sale Agreement

by and between

Diamond “M” Production Company, as Seller,

and

Parallel Petroleum Corporation and Ted Collins, Jr., as Buyer




LITIGATION AND CLAIMS




None.




 









 








SCHEDULE 10.10




To Purchase and Sale Agreement

by and between

Diamond “M” Production Company, as Seller,

and

Parallel Petroleum Corporation and Ted Collins, Jr., as Buyer




CAPITAL COMMITMENTS




None.



SCHEDULE 10.11




To Purchase and Sale Agreement

by and between

Diamond “M” Production Company, as Seller,

and

Parallel Petroleum Corporation and Ted Collins, Jr., as Buyer




VIOLATIONS OF LAW




None.




 









 








SCHEDULE 10.13




To Purchase and Sale Agreement

by and between

Diamond “M” Production Company, as Seller,

and

Parallel Petroleum Corporation and Ted Collins, Jr., as Buyer




MATERIAL CONTRACTS




None.




 









 





SCHEDULE 10.14




To Purchase and Sale Agreement

by and between

Diamond “M” Production Company, as Seller,

and

Parallel Petroleum Corporation and Ted Collins, Jr., as Buyer




PREFERENTIAL RIGHTS




	 	 	 	 	 	 	 	 	 	 	 
	CONTRACT	 	DATE	 	ORIGINAL PARTIES	 	WELL	 	COUNTY	 	STATE
	JOA to Trade Agreement

	 	12/10/2001
	 	Diamond M/Parallel et al
	 	LDMU Deep
	 	Scurry
	 	TX
	 
	JOA to Trade Agreement

	 	12/10/2001
	 	Diamond M/Parallel et al
	 	LDMU Deep-Retained
	 	Scurry
	 	TX
	 
	JOA to Trade Agreement

	 	12/10/2001
	 	Diamond M/Parallel et al
	 	GCW Shallow
	 	Scurry
	 	TX
	 
	JOA to Trade Agreement

	 	12/10/2001
	 	Diamond M/Parallel et al
	 	GCW Shallow-Retained
	 	Scurry
	 	TX






 









 





SCHEDULE 10.15




To Purchase and Sale Agreement

by and between

Diamond “M” Production Company, as Seller,

and

Parallel Petroleum Corporation and Ted Collins, Jr., as Buyer




ENVIRONMENTAL




None.




 









 





SCHEDULE 10.16




To Purchase and Sale Agreement

by and between

Diamond “M” Production Company, as Seller,

and

Parallel Petroleum Corporation and Ted Collins, Jr., as Buyer




SUSPENSE ACCOUNTS




None.




 









 





SCHEDULE 10.18




To Purchase and Sale Agreement

by and between

Diamond “M” Production Company, as Seller,

and

Parallel Petroleum Corporation and Ted Collins, Jr., as Buyer




PAYOUT BALANCES




	 	 	 	 	 	 	 	 	 
	Property

	 	Operator
	 	Month
	 	Balance

	Diamond M

	 	Parallel Petroleum Corporation, et al
	 	Mar-08
	 	$	25,598,714	 






 









 






SCHEDULE 10.19




To Purchase and Sale Agreement

by and between

Diamond “M” Production Company, as Seller,

and

Parallel Petroleum Corporation and Ted Collins, Jr., as Buyer




SURFACE




None.




 









 





EXHIBIT A




To Purchase and Sale Agreement

by and between

Diamond “M” Production Company, as Seller,

and

Parallel Petroleum Corporation and Ted Collins, Jr., as Buyer




	 	 	 	 	 
	STATE OF TEXAS

	 	§
	 	 
	 

	 	§	 	 
	COUNTY OF SCURRY

	 	§	 	 






ASSIGNMENT AND BILL OF SALE




     THIS ASSIGNMENT AND BILL OF SALE (“Assignment”) executed by DIAMOND “M” PRODUCTION COMPANY, a
Delaware corporation (“Assignor”), whose address is 2350 N. Sam Houston Parkway East, Suite 125,
Houston, Texas 77032, to PARALLEL PETROLEUM CORPORATION, a Delaware corporation, whose address is
1004 North Big Spring, Suite 400, Midland, Texas 79701, and TED COLLINS, JR., an individual, whose
address is 508 W. Wall Street, Suite 1200, Midland, Texas 79701 (collectively the “Assignees”),
dated effective at 7:00 a.m., local time, on May 1, 2008 (said hour and day being hereinafter
called the “Effective Time”).



     All capitalized terms not defined herein shall have the meanings ascribed to them in that
certain Purchase and Sale Agreement dated effective May, 1, 2008, executed by and between Assignor
and Assignee.



ARTICLE I

Assignment of Oil and Gas Properties




     Assignor, for Ten and No/100 Dollars ($10.00) and other good and valuable consideration in
hand paid by Assignees, the receipt and sufficiency of which consideration are hereby acknowledged
and confessed, by these presents does hereby ASSIGN, TRANSFER, SET OVER and DELIVER unto Assignees,
in the respective percentages set forth below, all of Assignor’s right, title and interest in and
to the following properties described below in Section 1.2.




	1.1.	 	 Percentages.





	 	 	 
	Parallel Petroleum Corporation

	 	89% of 8/8ths
	Ted Collins, Jr.

	 	11% of 8/8ths






A-1









 





1.2 Properties. The interests granted, bargained, sold, conveyed, assigned and delivered
to Assignees pursuant to this Article I and described in this Section 1.2 are hereinafter sometimes
collectively called the “Properties”:




     (a) All of Assignor’s right, title and interest in, to and under or derived from the oil and
gas leasehold interests, fee interests and mineral interests in the lands described on Exhibit
A, including, but not limited to those interests created or described in the instruments
described in Exhibit A-1 (collectively, the “Leases”);



     (b) All of Assignor’s right, title and interest in, to and under or derived from the oil and
gas wells located on the Leases and described on Exhibit A-2 (the “Wells”);



     (c) All of Assignor’s right, title and interest in and to, or derived from, all of the
presently existing and valid unitization and pooling agreements and units (including all units
formed by voluntary agreement and those formed under the rules, regulations, orders or other
official acts of any governmental entity having appropriate jurisdiction) to the extent they relate
to any of the interests in the Leases or the Wells;



     (d) All of Assignor’s right, title and interest in and to all oil, gas and/or other liquid or
gaseous hydrocarbons (collectively, the “Hydrocarbons”) produced from or attributable to the Leases
or the Wells and attributable to the period from and after the Effective Time;



     (e) All of Assignor’s right, title and interest in and to, or derived from, all of the
presently existing and valid oil sales contracts, casinghead gas sales contracts, gas sales
contracts, processing contracts, gathering contracts, transportation contracts, easements,
rights-of-way, servitudes, surface leases and other contracts (including the Assumed Contracts), to
the extent the same are assignable and relate to the Leases or the Wells;



     (f) All of Assignor’s right, title and interest in and to all personal property and
improvements (collectively, the “Equipment”), including without limitation, wells (whether
producing, plugged and abandoned, shut-in, injection, disposal or water supply), tanks, boilers,
platforms, buildings, fixtures, machinery, equipment, pipelines, utility lines, power lines,
telephone lines, telegraph lines and other appurtenances located on, in, under and about the Leases
or the Wells, to the extent the same are situated upon and used or held for use by Assignor in
connection with the ownership, operation, maintenance and repair of the Leases or the Wells,
subject to the reservations stated below;



     (g) All franchises, licenses, permits, approvals, consents, certificates and other
authorizations and other rights granted by governmental authorities and all certificates of
convenience or necessity, immunities, privileges, grants and other rights that relate to the
Properties or the ownership or operation of any thereof, to the extent the same are assignable (the
“Permits”); and



     (h) All of Assignor’s books, records and files related to the any of the properties described
in (a) through (f) above, including all (i) abstracts, title opinions, title reports, environmental
site assessments, environmental compliance reports, lease and land files, surveys,



A-2









 







analyses, compilations, correspondence, filings with and reports to regulatory agencies and other
documents, contracts, agreements and instruments that in any manner relate to such properties,
(ii) computer databases that are owned by or licensed to Assignor that relate to such properties,
(iii) geophysical, geological, engineering, exploration, production and other technical data,
magnetic field recordings, digital processing tapes, field prints, summaries, reports and maps,
whether written or in electronically reproducible form, that are in the possession of Assignor and
relate to such properties and (iv) all other books, records, files and magnetic tapes containing
title or other information that are in the possession of Assignor and relate to such properties
(the “Data”), but specifically excluding (i) previous offers and economic analyses
associated with the acquisition, sale or exchange of such properties, (ii) interpretive
information, (iii) personnel information, (iv) corporate, legal, financial and tax information,
(v) information covered by a non-disclosure obligation, (vi) information covered by a legal
privilege and (vii) any other Data or information that Assignor does not have the right to assign
to Assignees.



     TO HAVE AND TO HOLD the Properties unto Assignees, their respective successors and assigns
forever, subject, however, to the matters set forth herein.



ARTICLE II

Warranty of Title; Permitted Encumbrances




     2.1 Warranty of Title. Assignor does hereby bind itself to warrant and forever
defend, all and singular, the Properties unto Assignees, against every person whomsoever lawfully
claiming or to claim the same or any part thereof, by, through or under Assignor, but not
otherwise, and subject to the Permitted Encumbrances (as defined below).



     2.2 Disclaimer of Representations and Warranties. THE PROPERTIES ARE ASSIGNED TO
ASSIGNEES “AS IS, WHERE IS” AND WITH ALL FAULTS IN THEIR PRESENT CONDITION AND STATE OF REPAIR,
WITHOUT RECOURSE. EXCEPT AS EXPRESSLY SET FORTH IN SECTION 2.1 HEREOF, ASSIGNOR HEREBY DISCLAIMS
ANY AND ALL REPRESENTATIONS AND WARRANTIES CONCERNING THE PROPERTIES, EXPRESS, STATUTORY, IMPLIED
OR OTHERWISE, INCLUDING WITHOUT LIMITATION, ANY WARRANTIES OF TITLE, THE QUALITY OF HYDROCARBON
RESERVES, THE QUANTITY OF HYDROCARBON RESERVES, THE AMOUNT OF REVENUES, THE AMOUNT OF OPERATING
COSTS, CONDITION (PHYSICAL OR ENVIRONMENTAL), QUALITY, COMPLIANCE WITH APPLICABLE LAWS, ABSENCE OF
DEFECTS (LATENT OR PATENT), SAFETY, STATE OF REPAIR, MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, AND ASSIGNEES EXPRESSLY RELEASE ASSIGNOR FROM THE SAME. ASSIGNOR DISCLAIMS ANY AND ALL
LIABILITY AND RESPONSIBILITY FOR AND ASSOCIATED WITH THE QUALITY, ACCURACY, COMPLETENESS OR
MATERIALITY OF THE RECORDS AND ANY OTHER INFORMATION PROVIDED AT ANY TIME (WHETHER ORAL OR WRITTEN)
TO ASSIGNEES, THEIR OFFICERS, AGENTS, EMPLOYEES AND REPRESENTATIVES IN CONNECTION WITH THE
PROPERTIES, INCLUDING WITHOUT LIMITATION, QUALITY OF HYDROCARBON RESERVES, QUANTITY OF HYDROCARBON
RESERVES, AMOUNT OF REVENUES, AMOUNT OF OPERATING COSTS,



A-3









 







FINANCIAL DATA, CONTRACT DATA, ENVIRONMENTAL CONDITION OF THE PROPERTIES, PHYSICAL CONDITION OF THE
PROPERTIES AND CONTINUED FINANCIAL VIABILITY OF THE PROPERTIES, AND ASSIGNEES EXPRESSLY RELEASE
ASSIGNOR FROM THE SAME.



     2.3 Subrogation. Assignees shall be and are hereby subrogated to all covenants and warranties
of title by parties (other than Assignor) heretofore given or made to Assignor or its predecessors
in title in respect of any of the Properties.



     2.4 Purchase and Sale Agreement. The Properties are assigned by Assignor and accepted
by Assignees expressly subject to the following:




     (a) the terms and conditions of that certain Purchase and Sale Agreement dated
effective May 1, 2008, executed by and between Assignor and Assignee (the “P&S Agreement”);
and




     (b) those “Permitted Encumbrances” more particularly described and defined in the P&S
Agreement.



ARTICLE III

Miscellaneous




     3.1 Further Assurances. Assignor covenants and agrees to execute and deliver to
Assignees all such other and additional instruments and other documents and will do all such other
acts and things as may be necessary more fully to assure to Assignees or their successors or
assigns, all of the respective properties, rights and interests herein and hereby assigned or
intended to be assigned, including without limitation, executing separate assignments of individual
oil, gas and mineral leases or interests therein, which are included in the Properties and which
are necessary to facilitate the recognition of Assignees’ ownership of the Properties.



     3.2 Successors and Assigns. All of the provisions hereof shall inure to the benefit
of and be binding upon the respective successors and assigns of Assignor and Assignees. All
references herein to either Assignor or Assignees shall include their respective successors and
assigns.



     3.3 Counterparts. This Assignment may be executed in several original counterparts, all of
which are identical, and each such counterpart hereof shall be deemed to be an original instrument,
but all such counterparts shall constitute but one and the same assignment.



     IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be executed on the dates
of their respective acknowledgments set forth below, to be effective, however, as of the Effective
Time.



A-4









 





	 	 	 	 	 
	 	 	Assignor
	 
	 	 	 	 
	 	 	DIAMOND “M” PRODUCTION COMPANY
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:
	 	Richard F. Lane
	 

	 	Title:
	 	President
	 
	 	 	 	 
	 	 	Assignee
	 
	 	 	 	 
	 	 	PARALLEL PETROLEUM CORPORATION
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:
	 	John S. Rutherford
	 

	 	Title:
	 	Vice President
	 
	 	 	 	 
	 	 	Assignee
	 
	 	 	 	 
	 	 	TED COLLINS, JR.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:
	 	J. Randy Turner, as Agent and Attorney-in-Fact for
	 

	 	 	 	Ted Collins, Jr.






A-5









 






	 	 	 	 	 
	THE STATE OF TEXAS

	 	§
	 	 
	 

	 	§	 	 
	COUNTY OF HARRIS

	 	§	 	 






     This instrument was acknowledged before me on the 26th day of June, 2008, by Richard F. Lane,
President of Diamond “M” Production Company, a Delaware corporation, on behalf of said corporation.



	 	 	 
	 

	 	 
	 

	 	Notary Public in and for the State of Texas






	 	 	 	 	 
	THE STATE OF TEXAS

	 	§
	 	 
	 

	 	§	 	 
	COUNTY OF HARRIS

	 	§	 	 






     This instrument was acknowledged before me on the 26th day of June, 2008, by John S.
Rutherford, Vice President of Parallel Petroleum Corporation, a Delaware corporation, on behalf of
said corporation.



	 	 	 
	 

	 	 
	 

	 	Notary Public in and for the State of Texas






	 	 	 	 	 
	THE STATE OF TEXAS

	 	§
	 	 
	 

	 	§	 	 
	COUNTY OF MIDLAND

	 	§	 	 






     This instrument was acknowledged before me on the 25th day of June, 2008, by J. Randy Turner,
as Agent and Attorney-in-Fact for Ted Collins, Jr., an individual.



	 	 	 
	 

	 	 
	 

	 	Notary Public in and for the State of Texas







A-6









 








EXHIBIT B




To Purchase and Sale Agreement

by and between

Diamond “M” Production Company, as Seller,

and

Parallel Petroleum Corporation and Ted Collins, Jr., as Buyer




CERTIFICATE




     I,                                         ,                 
     of             [Seller/Buyer]             , a
                     corporation (“                    ”), do hereby certify pursuant to Section [15.2.3/15.3.3] of the
Purchase and Sale Agreement by and between Diamond “M” Production Company and                     ,
dated                     , 2008 (the “Agreement”), that the representations and warranties of
            [Seller/Buyer]             made in the Agreement are true and correct on and as of the date hereof,
except for inaccuracies which in the aggregate are not material when considering the transaction as
a whole.



	 	 	 	 	 
	 

	 	Signed:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Date:	 	 
	 

	 	 	 	 





B-1









 





EXHIBIT “C”




To Purchase and Sale Agreement

by and between

Diamond “M” Production Company, as Seller,

and

Parallel Petroleum Corporation and Ted Collins, Jr., as Buyer




DESCRIPTION OF LANDS



*The following-described lands in Scurry County, Texas:



Block 25, H&TC RR Co. Survey:



Section 170: SE/4/SE/4

Section 147: All except the West 80 acres of the North 140 acres



Block 97, H&TC RR Co. Survey:

Section 199: All except the N/2 N/2 and S/2 NW/4

Section 198: All

Section 181: All

Section 200: S/2

Section 197: All

Section 182: N/2 and SE/4

Section 201: S/2

Section 196: All

Section 183: All

Section 178: NW/4, W/2 NE/4, W/2 SW/4, NE/4 SW/4





 




	*	 	It being the intent of SELLER hereof to sell all rights to leases and wells situated on or
covered by the above-described lands.




C-1









 











EXHIBIT C-1




To Purchase and Sale Agreement

by and between

Diamond “M” Production Company, as Seller,

and

Parallel Petroleum Corporation and Ted Collins, Jr., as Buyer




DESCRIPTION OF LEASES



To be attached.




C-2









 





EXHIBIT “C-1” — LEASES



To Purchase and Sale Agreement by and between Diamond “M” Production Company, as Seller, 

and Parallel Petroleum Corporation and Ted Collins, Jr., as Buyer




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	LEASE ID	 	LESSOR	 	LESSEE	 	LSE EFF DATE	 	 	COUNTY	 	ST	 	BOOK / PAGE
	TX-001311-00337A-001
	 	J A BYNUM ET AL	 	CANNON DRILLING COMPANY	 	 	12	 	 	 	24	 	 	 	1946	 	 	SCURRY	 	TX	 	31	 	573
	TX-001311-00337A-002
	 	JODIE BYNUM	 	CANNON DRILLING COMPANY	 	 	2	 	 	 	17	 	 	 	1947	 	 	SCURRY	 	TX	 	31	 	571
	TX-001311-00338A-000
	 	C T MCLAUGHLIN ET UX	 	LION OIL REFINING COMPANY	 	 	7	 	 	 	7	 	 	 	1944	 	 	SCURRY	 	TX	 	26	 	124
	TX-001311-00339A-001
	 	CLEATUS LOVELESS ET UX	 	BEN HARWIT	 	 	8	 	 	 	18	 	 	 	1948	 	 	SCURRY	 	TX	 	41	 	105
	TX-001311-00339A-002
	 	W S GUTHRIE ET UX	 	W P THURMAN	 	 	10	 	 	 	24	 	 	 	1944	 	 	SCURRY	 	TX	 	26	 	313
	TX-001311-00339A-003
	 	C T MCLAUGHLIN ET UX	 	W P THURMAN	 	 	10	 	 	 	24	 	 	 	1944	 	 	SCURRY	 	TX	 	26	 	315
	TX-001311-00340A-001
	 	J C WILSON ET UX	 	J W SCOTT	 	 	7	 	 	 	8	 	 	 	1944	 	 	SCURRY	 	TX	 	26	 	117
	TX-001311-00341A-000
	 	W P DOUGLAS ET UX	 	LION OIL REFINING COMPANY	 	 	7	 	 	 	7	 	 	 	1944	 	 	SCURRY	 	TX	 	25	 	442
	TX-001311-00342A-000
	 	FRANK STROM ET UX	 	LION OIL REFINING COMPANY	 	 	7	 	 	 	7	 	 	 	1944	 	 	SCURRY	 	TX	 	26	 	120
	TX-001311-00343A-000
	 	FRANK STROM ET UX	 	RUSSELL C CONKLING	 	 	5	 	 	 	4	 	 	 	1946	 	 	SCURRY	 	TX	 	29	 	322
	TX-001311-00344A-001
	 	J R CANNING ET UX	 	C R CRAIG	 	 	10	 	 	 	5	 	 	 	1949	 	 	SCURRY	 	TX	 	73	 	311
	TX-001311-00345A-001
	 	MARGARET MOGERLEY	 	LION OIL COMPANY	 	 	7	 	 	 	27	 	 	 	1948	 	 	SCURRY	 	TX	 	42	 	413
	TX-001311-00345A-002
	 	MRS CHARLES W BRADLEY	 	LION OIL COMPANY	 	 	8	 	 	 	2	 	 	 	1948	 	 	SCURRY	 	TX	 	42	 	421
	TX-001311-00345A-003
	 	LESTER THOMPKINS	 	LION OIL COMPANY	 	 	7	 	 	 	22	 	 	 	1948	 	 	SCURRY	 	TX	 	42	 	409
	TX-001311-00345A-004
	 	HARRY J MANTIA	 	LION OIL COMPANY	 	 	7	 	 	 	20	 	 	 	1948	 	 	SCURRY	 	TX	 	42	 	407
	TX-001311-00345A-005
	 	J C WILSON ET UX	 	LION OIL REFINING COMPANY	 	 	7	 	 	 	8	 	 	 	1944	 	 	SCURRY	 	TX	 	26	 	253
	TX-001311-00345A-006
	 	GLEN N W MCNAUGHTON	 	LION OIL COMPANY	 	 	7	 	 	 	20	 	 	 	1948	 	 	SCURRY	 	TX	 	42	 	401
	TX-001311-00345A-007
	 	MARY CARDONE ET AL	 	LION OIL COMPANY	 	 	7	 	 	 	27	 	 	 	1948	 	 	SCURRY	 	TX	 	51	 	87
	TX-001311-00345A-008
	 	R E MEINERT	 	LION OIL COMPANY	 	 	2	 	 	 	17	 	 	 	1949	 	 	SCURRY	 	TX	 	48	 	233
	TX-001311-00345A-009
	 	JOHN H BIRD	 	LION OIL COMPANY	 	 	7	 	 	 	26	 	 	 	1948	 	 	SCURRY	 	TX	 	47	 	267
	TX-001311-00345A-010
	 	HELEN L DESERRAS ET VIR	 	LION OIL COMPANY	 	 	10	 	 	 	19	 	 	 	1948	 	 	SCURRY	 	TX	 	45	 	211
	TX-001311-00345A-011
	 	DENNIS R HORGAN ET AL	 	LION OIL COMPANY	 	 	10	 	 	 	19	 	 	 	1948	 	 	SCURRY	 	TX	 	42	 	435
	TX-001311-00345A-012
	 	BRADLEY GEORGE	 	LION OIL COMPANY	 	 	8	 	 	 	2	 	 	 	1948	 	 	SCURRY	 	TX	 	42	 	419
	TX-001311-00345A-013
	 	COMMONWEALTH TRUST COMPANY	 	LION OIL REFINING COMPANY	 	 	1	 	 	 	23	 	 	 	1945	 	 	SCURRY	 	TX	 	27	 	114
	TX-001311-00345A-014
	 	J H FRENCH	 	LION OIL COMPANY	 	 	8	 	 	 	2	 	 	 	1948	 	 	SCURRY	 	TX	 	42	 	429
	TX-001311-00345A-015
	 	HARRY W LEOPOLD ET UX	 	LION OIL REFINING COMPANY	 	 	3	 	 	 	1	 	 	 	1945	 	 	SCURRY	 	TX	 	27	 	194
	TX-001311-00345A-016
	 	ARTHUR C ATTAWAY	 	LION OIL COMPANY	 	 	7	 	 	 	26	 	 	 	1948	 	 	SCURRY	 	TX	 	42	 	431
	TX-001311-00345A-017
	 	SARAH JARET ET VIR	 	LION OIL COMPANY	 	 	7	 	 	 	26	 	 	 	1948	 	 	SCURRY	 	TX	 	42	 	415
	TX-001311-00345A-018
	 	ISAAC L DAY	 	LION OIL COMPANY	 	 	7	 	 	 	23	 	 	 	1948	 	 	SCURRY	 	TX	 	42	 	425
	TX-001311-00345A-019
	 	NELSON LITTELL	 	LION OIL COMPANY	 	 	7	 	 	 	27	 	 	 	1948	 	 	SCURRY	 	TX	 	42	 	417
	TX-001311-00345A-020
	 	ALBERT MELTSNER	 	LION OIL COMPANY	 	 	7	 	 	 	27	 	 	 	1948	 	 	SCURRY	 	TX	 	42	 	423
	TX-001311-00345A-021
	 	LESTER CORNELL	 	LION OIL COMPANY	 	 	7	 	 	 	26	 	 	 	1948	 	 	SCURRY	 	TX	 	42	 	405
	TX-001311-00345A-022
	 	ELLA MCCASLIN	 	LION OIL COMPANY	 	 	7	 	 	 	22	 	 	 	1948	 	 	SCURRY	 	TX	 	42	 	433
	TX-001311-00345A-023
	 	WILLIAM C NASH	 	LION OIL COMPANY	 	 	7	 	 	 	22	 	 	 	1948	 	 	SCURRY	 	TX	 	42	 	427
	TX-001311-00345A-024
	 	SPENCER A NORRIS	 	LION OIL COMPANY	 	 	7	 	 	 	20	 	 	 	1948	 	 	SCURRY	 	TX	 	42	 	403
	TX-001311-00345A-025
	 	VICTOR PERRY	 	LION OIL COMPANY	 	 	7	 	 	 	26	 	 	 	1948	 	 	SCURRY	 	TX	 	42	 	411
	TX-001311-00345A-026
	 	R W GUTZIER	 	LION OIL COMPANY	 	 	9	 	 	 	8	 	 	 	1950	 	 	SCURRY	 	TX	 	97	 	199
	TX-001311-00345A-027
	 	R W GUTZIER	 	LION OIL COMPANY	 	 	9	 	 	 	24	 	 	 	1951	 	 	SCURRY	 	TX	 	111	 	199
	TX-001311-00345A-028
	 	RAY W GUTZIER	 	LION OIL COMPANY	 	 	11	 	 	 	4	 	 	 	1949	 	 	SCURRY	 	TX	 	70	 	357
	TX-001311-00345A-029
	 	R W GUTZIER	 	LION OIL COMPANY	 	 	8	 	 	 	2	 	 	 	1952	 	 	SCURRY	 	TX	 	123	 	81
	TX-001311-00345A-030
	 	R W GUTZIER	 	LION OIL COMPANY	 	 	9	 	 	 	8	 	 	 	1950	 	 	SCURRY	 	TX	 	123	 	83
	TX-001311-00345A-031
	 	DAVID DARCY	 	LION OIL COMPANY	 	 	12	 	 	 	5	 	 	 	1952	 	 	SCURRY	 	TX	 	128	 	215
	TX-001311-00345A-032
	 	SUNRAY MID-CONTINENT OIL COMPANY	 	MONSANTO CHEMICAL COMPANY	 	 	12	 	 	 	1	 	 	 	1960	 	 	SCURRY	 	TX	 	208	 	625
	TX-001311-00345A-033
	 	SUNRAY MID-CONTINENT OIL COMPANY	 	BHP PETROLEUM COMPANY INC	 	 	3	 	 	 	30	 	 	 	1988	 	 	SCURRY	 	TX	 	300	 	871
	TX-001311-00346A-000
	 	WALTER L GEYER SR	 	LION OIL COMPANY	 	 	6	 	 	 	25	 	 	 	1952	 	 	SCURRY	 	TX	 	121	 	381
	TX-001311-00347A-000
	 	C T MCLAUGHLIN ET UX	 	BEN HARWIT	 	 	3	 	 	 	12	 	 	 	1948	 	 	SCURRY	 	TX	 	32	 	359
	TX-001311-00348A-000
	 	AUSTIN ADDISON GUARDIAN	 	HIAWATHA OIL AND GAS COMPANY	 	 	2	 	 	 	23	 	 	 	1949	 	 	SCURRY	 	TX	 	48	 	257
	TX-001311-00349A-000
	 	C C MARR ET UX	 	CANNON DRILLING COMPANY	 	 	12	 	 	 	24	 	 	 	1946	 	 	SCURRY	 	TX	 	31	 	481
	TX-001311-00350A-000
	 	ESTATE OF LEMMIE MONROE WILSON	 	LION OIL COMPANY	 	 	11	 	 	 	3	 	 	 	1950	 	 	SCURRY	 	TX	 	 	 	 
	TX-001311-00351A-000
	 	G H ARLEDGE	 	LION OIL COMPANY	 	 	11	 	 	 	1	 	 	 	1950	 	 	SCURRY	 	TX	 	 	 	 
	 
	 	FRANK STROM ET UX	 	HONOLULU OIL CORP	 	 	4	 	 	 	26	 	 	 	1949	 	 	SCURRY	 	TX	 	55	 	345
	 
	 	J R CANNING ET UX	 	E M WAHLENMAIER	 	 	3	 	 	 	3	 	 	 	1944	 	 	SCURRY	 	TX	 	25	 	327






PAGE 1 OF 1









 








EXHIBIT C-2




To Purchase and Sale Agreement

by and between

Diamond “M” Production Company, as Seller,

and

Parallel Petroleum Corporation and Ted Collins, Jr., as Buyer




DESCRIPTION OF WELLS



To be attached.





C-3









 





EXHIBIT “C-2” — DESCRIPTION OF WELLS



To Purchase and Sale Agreement by and between Diamond “M” Production Company, as Seller, 

and Parallel Petroleum Corporation and Ted Collins, Jr., as Buyer




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Property No.	 	Well Name	 	API Number	 	 	WI BPO	 	 	NRI BPO	 	 	ORRI/ROY BPO	 	 	WI APO	 	 	NRI APO	 	 	ORRI/ROY APO	 	 	State	 	County
	 	200062001A	 	 	BYNUM UNIT
	 	 	4241502747	 	 	 	0.00000000	 	 	 	0.00000000	 	 	 	 	 	 	 	0.00000000	 	 	 	0.00000000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	DIAMOND M UNIT
	 	 	 	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	0.384610%	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	0.384610%	 	 	TX	 	SCURRY
	 	 	 	 	LDMU 1W
	 	 	4241501107	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU 2 (T/A)
	 	 	4241501485	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU C-10
	 	 	4241501378	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU E-3 (T/A)
	 	 	4241501483	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU E-9
	 	 	4241501034	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU E-11 (T/A)
	 	 	4241501380	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU E-11A
	 	 	4241501042	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU F-1
	 	 	4241501477	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU F-1A — TOPAZ
	 	 	4241533929	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU F-7
	 	 	4241501458	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU F-8
	 	 	4241501427	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU F-10A (T/A)
	 	 	4241532754	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU G-01-A (S/I)
	 	 	 	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU G-7A
	 	 	4241534186	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU G-9 (T/A)
	 	 	4241501388	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU G-12
	 	 	4241501512	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU G-10
	 	 	4241501389	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU H-1
	 	 	4241501473	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU H-6 WIW
	 	 	4241501439	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU H-8 (T/A)
	 	 	4241501422	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU H-9
	 	 	4241501387	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU I-1
	 	 	4241501493	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU I-2
	 	 	4241501485	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU I-2W
	 	 	4241501520	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU I-3W
	 	 	4241501115	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU I 3W
	 	 	4241501487	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU I-4-W
	 	 	4241501116	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU I-4
	 	 	4241501488	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU I-5
	 	 	4241501455	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU I-6
	 	 	4241501435	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU I-7A
	 	 	4241531461	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU I-8 (T/A)
	 	 	4241501420	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU I-8A (T/A)
	 	 	4241531836	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU J-1W
	 	 	4241501516	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU J-2 (T/A)
	 	 	4241501492	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY






1









 





EXHIBIT “C-2” — DESCRIPTION OF WELLS



To Purchase and Sale Agreement by and between Diamond “M” Production Company, as Seller, 

and Parallel Petroleum Corporation and Ted Collins, Jr., as Buyer




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Property No.	 	Well Name	 	API Number	 	 	WI BPO	 	 	NRI BPO	 	 	ORRI/ROY BPO	 	 	WI APO	 	 	NRI APO	 	 	ORRI/ROY APO	 	 	State	 	County
	 	 	 	 	LDMU J-3 W (T/A)
	 	 	4241501114	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU J-3 (INJ)
	 	 	4241501490	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU J-4
	 	 	4241501489	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU J-7
	 	 	4241501419	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU J-7A
	 	 	4241530312	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU J-9 WIW
	 	 	 	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU K-1
	 	 	4241501499	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU K-2
	 	 	4241501495	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU K-4-W
	 	 	4241501112	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736800	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU K-4
	 	 	4241501491	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU K-5
	 	 	4241501462	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU K-5A
	 	 	4241530837	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU K-8 (S/I)
	 	 	4241501423	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU K-9 WIW
	 	 	 	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU K-10
	 	 	4241501432	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU L-1-W
	 	 	4241501500	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU L-2 JADE
	 	 	4241533928	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU L-3A
	 	 	4241534184	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU L-3
	 	 	4241501496	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU L-4
	 	 	4241501498	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU L-6
	 	 	4241501454	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU L-8 (T/A)
	 	 	4241501425	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU L-10 WIW
	 	 	4241501436	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU M-1
	 	 	4241501107	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU M-1W
	 	 	4241501508	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU M-4
	 	 	4241501501	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU M-6
	 	 	4241501460	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU N-9
	 	 	424150144	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU EMERALD 1
	 	 	 	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU GARNET 1
	 	 	4241533949	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736800	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU GAS GATHERING LINE
	 	 	 	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	 	99.51298000	 	 	 	86.54068000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	LDMU ZIRCON 1
	 	 	 	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY






2









 





EXHIBIT “C-2” — DESCRIPTION OF WELLS



To Purchase and Sale Agreement by and between Diamond “M” Production Company, as Seller,

 and Parallel Petroleum Corporation and Ted Collins, Jr., as Buyer




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Property No.	 	Well Name	 	API Number	 	 	WI BPO	 	 	NRI BPO	 	 	ORRI/ROY BPO	 	 	WI APO	 	 	NRI APO	 	 	ORRI/ROY APO	 	 	State	 	County
	 	 	 	 	GCW UNIT
	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	GEMSTONE — PARALLEL ACTIVE WELLS
	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	GCW UNIT L11
	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	CLARENCE 2
	 	 	4241501381	 	 	 	1.00000000	 	 	 	87.50000000	 	 	 	 	 	 	 	1.00000000	 	 	 	87.50000000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	CLARENCE 4
	 	 	 	 	 	 	1.00000000	 	 	 	87.50000000	 	 	 	 	 	 	 	1.00000000	 	 	 	87.50000000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	CLARENCE 5
	 	 	4241501384	 	 	 	1.00000000	 	 	 	87.50000000	 	 	 	 	 	 	 	1.00000000	 	 	 	87.50000000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	CLARENCE 7 (T/A)
	 	 	4241501385	 	 	 	1.00000000	 	 	 	87.50000000	 	 	 	 	 	 	 	1.00000000	 	 	 	87.50000000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	CLARENCE 8
	 	 	4241501386	 	 	 	1.00000000	 	 	 	87.50000000	 	 	 	 	 	 	 	1.00000000	 	 	 	87.50000000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	CLARENCE 10
	 	 	4241531278	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	GERTIE/GCW
	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	GERTIE A/GCW
	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	GERTIE 5
	 	 	2421501391	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	GERTIE 6
	 	 	4241501392	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	GERTIE 7
	 	 	4241501393	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	GERTIE A 9 (T/A)
	 	 	4241532277	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	GERTIE A 10
	 	 	4241532438	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	GERTIE A 11
	 	 	4241532475	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	GERTIE A 12
	 	 	4241532962	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	GERTIE A 13
	 	 	4241532960	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	GERTIE A 16 (S/I)
	 	 	 	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	GERTIE A 17
	 	 	4241534077	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	JACK 9
	 	 	4241501404	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	JACK 12
	 	 	4241501407	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	JACK 13
	 	 	4241501408	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	JACK 15
	 	 	4241501412	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	JACK 16
	 	 	4241501411	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	JACK 17
	 	 	4241531685	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	JACK 18
	 	 	4241531682	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	JACK 19
	 	 	4241531776	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	JACK 20
	 	 	4241531774	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	JACK 21
	 	 	4241531775	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	JACK 22
	 	 	4241532078	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	JACK 23
	 	 	4241532079	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	JACK 25 (S/I)
	 	 	4241534030	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	JACK 26 WIW (S/I)
	 	 	4241534058	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	JACK 27 WIW (INJ)
	 	 	4241534056	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	JACK 28 WIW (INJ)
	 	 	4241534057	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY






3









 





EXHIBIT “C-2” — DESCRIPTION OF WELLS



To Purchase and Sale Agreement by and between Diamond “M” Production Company, as Seller, 

and Parallel Petroleum Corporation and Ted Collins, Jr., as Buyer




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Property No.	 	Well Name	 	API Number	 	 	WI BPO	 	 	NRI BPO	 	 	ORRI/ROY BPO	 	 	WI APO	 	 	NRI APO	 	 	ORRI/ROY APO	 	 	State	 	County
	 	 	 	 	JACK 29 WIW (S/I)
	 	 	4241534055	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	JACK 30 WIW (INJ)
	 	 	4241534054	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	JACK 31 WIW (S/I)
	 	 	4241534084	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	JACK 32 (INJ)
	 	 	4241534085	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	JACK 34 WIW (INJ)
	 	 	4241534088	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	JACK 35 WIW
	 	 	4241534089	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	JACK 36
	 	 	4241534059	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	JACK 37
	 	 	4241534060	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	JACK 38
	 	 	4241534061	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	JACK 39
	 	 	4241534062	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	JACK 40 WIW
	 	 	4241534090	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	JACK 41 WIW
	 	 	4241534091	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.45275500	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1 GCW
	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1D
	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1 43
	 	 	4241530624	 	 	 	1.00000000	 	 	 	87.50000000	 	 	 	 	 	 	 	1.00000000	 	 	 	87.50000000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1 63
	 	 	4241530375	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1 64 (S/I)
	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1 65
	 	 	4241531777	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1 66
	 	 	4241531763	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1 71
	 	 	4241531902	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1 73
	 	 	4241531899	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1 75
	 	 	4241531941	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1 78
	 	 	4241532050	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1 85
	 	 	4241532082	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1 86
	 	 	4241532099	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1 87
	 	 	4241532083	 	 	 	1.00000000	 	 	 	87.50000000	 	 	 	 	 	 	 	1.00000000	 	 	 	87.50000000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1 88
	 	 	4241532171	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1 95
	 	 	4241532446	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1 96 (S/I)
	 	 	4241532445	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1 97
	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1 98
	 	 	4241532466	 	 	 	1.00000000	 	 	 	87.50000000	 	 	 	 	 	 	 	1.00000000	 	 	 	87.50000000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1 99
	 	 	4241532462	 	 	 	1.00000000	 	 	 	87.50000000	 	 	 	 	 	 	 	1.00000000	 	 	 	87.50000000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1 100
	 	 	4241532459	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1 101
	 	 	4241532512	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1 102 (T/A)
	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1 108
	 	 	4241533029	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.07151300	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1 110
	 	 	4241532794	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY






4









 





EXHIBIT “C-2” — DESCRIPTION OF WELLS



To Purchase and Sale Agreement by and between Diamond “M” Production Company, as Seller, 

and Parallel Petroleum Corporation and Ted Collins, Jr., as Buyer




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Property No.	 	Well Name	 	API Number	 	 	WI BPO	 	 	NRI BPO	 	 	ORRI/ROY BPO	 	 	WI APO	 	 	NRI APO	 	 	ORRI/ROY APO	 	 	State	 	County
	 	 	 	 	MCLAUGHLIN ACCT 1 117
	 	 	4241533030	 	 	 	1.00000000	 	 	 	87.50000000	 	 	 	 	 	 	 	1.00000000	 	 	 	87.50000000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1 119
	 	 	4241533229	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1 121
	 	 	4241533266	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1 130
	 	 	4241533927	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.07151300	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1 131 (S/I)
	 	 	4241534028	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1 133 WIW (INJ)
	 	 	4241534081	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1 134
	 	 	4241534073	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.07151300	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1 135
	 	 	4241534052	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.07151300	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1 136
	 	 	4241534053	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.07151300	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1 137 WIW (INJ)
	 	 	4241534082	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.07151300	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 1 138 WIW (INJ)
	 	 	4241534083	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.07151300	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 2 GCW
	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 2 52G (T/A)
	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 2 56
	 	 	4241502073	 	 	 	1.00000000	 	 	 	87.50000000	 	 	 	 	 	 	 	1.00000000	 	 	 	87.50000000	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 2 76
	 	 	4241531942	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 2 79 (T/A)
	 	 	4241532049	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 2 83
	 	 	4241532141	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.07151300	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 2 90
	 	 	4241533033	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 2 91
	 	 	4241532170	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 2 93
	 	 	4241532704	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 2 94 (S/I)
	 	 	4241532282	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 2 139
	 	 	4241534068	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.07151300	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 2 140
	 	 	4241534069	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.07151300	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 2 141 WIW
	 	 	4241534070	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.07151300	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 2 142 WIW (INJ)
	 	 	4241534071	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.07151300	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 3 1C (S/I)
	 	 	4241501982	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 3 2C
	 	 	4241501987	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 3 3C
	 	 	4241501992	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 3 51 A INJ
	 	 	4241532954	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 3 58 (T/A)
	 	 	4241502074	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.07151300	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 3 59 (T/A)
	 	 	4241502079	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.07151300	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 3 67
	 	 	4241531764	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 3 70
	 	 	4241531897	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 3 74
	 	 	4241531900	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 3 105
	 	 	4241532698	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 3 107
	 	 	4241533032	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 4 1A
	 	 	4241532798	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.07151300	 	 	 	 	 	 	TX	 	SCURRY






5









 





EXHIBIT “C-2” — DESCRIPTION OF WELLS



To Purchase and Sale Agreement by and between Diamond “M” Production Company, as Seller, 

and Parallel Petroleum Corporation and Ted Collins, Jr., as Buyer




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Property No.	 	Well Name	 	API Number	 	 	WI BPO	 	 	NRI BPO	 	 	ORRI/ROY BPO	 	 	WI APO	 	 	NRI APO	 	 	ORRI/ROY APO	 	 	State	 	County
	 	 	 	 	MCLAUGHLIN ACCT 4 1B
	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 4 2 A
	 	 	4241532826	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.07151300	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 4 2B (T/A)
	 	 	4241501986	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 4 103
	 	 	4241532517	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 4 118
	 	 	4241533215	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	MCLAUGHLIN ACCT 4 120
	 	 	4241533264	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	THURSTON/GCW
	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	THURSTON 6
	 	 	4241531683	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	THURSTON 7 (INJ)
	 	 	4241531718	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	THURSTON 8
	 	 	4241531779	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	THURSTON 10 (T/A)
	 	 	4241531778	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.07151300	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	THURSTON 11
	 	 	4241532961	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	THURSTON 12
	 	 	4241533031	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	 	1.00000000	 	 	 	85.52403700	 	 	 	 	 	 	TX	 	SCURRY
	 	 	 	 	THURSTON 14 WIW
	 	 	4241534072	 	 	 	24.87824500	 	 	 	21.63517000	 	 	 	 	 	 	 	37.31736750	 	 	 	32.07151300	 	 	 	 	 	 	TX	 	SCURRY





 




TA — Temporarily Abandoned

SI — Shut-in

INJ — Injection




6











 








EXHIBIT D




To Purchase and Sale Agreement

by and between

Diamond “M” Production Company, as Seller,

and

Parallel Petroleum Corporation and Ted Collins, Jr., as Buyer




MATERIAL CONTRACTS



To be attached.




D-1









 






EXHIBIT “D” — MATERIAL CONTRACTS

To Purchase and Sale Agreement by and between Diamond “M” Production Company, as Seller, 

and Parallel Petroleum Corporation and Ted Collins, Jr., as Buyer




	 	 	 	 	 	 	 	 	 
	DOCUMENT	 	PARTIES	 	DATE	 	COUNTY	 	ST
	UNITIZATION AGREEMENT
	 	LION OIL COMPANY, EVELYN MCLAUGHLIN, D A LITTLE, W P
CASTLEMAN JR, M C KRAMER, MARGARITE M LAWLESS, ET AL
(NON-OPERATOR)

	 	8/4/1949
	 	SCURRY
	 	TX
	UNITIZATION AGREEMENT
	 	LION OIL COMPANY (OPERATOR) AND W F BRIDEWELL
(NON-OPERATOR)

	 	8/22/1949
	 	SCURRY
	 	TX
	UNITIZATION AGREEMENT AND MEMO OF UNITIZATION
AGREEMENT
	 	LION OIL COMPANY AND ROYALTY OWNERS

	 	8/23/1949
	 	SCURRY
	 	TX
	UNITIZATION AGREEMENT
	 	LION OIL COMPANY / L B JOHNSON ET AL

	 	8/29/1949
	 	SCURRY
	 	TX
	UNITIZATION AGREEMENT
	 	LION OIL COMPANY (OPERATOR) AND EMPIRE OIL OF TEXAS
(NON-OPERATOR)

	 	10/19/1949
	 	SCURRY
	 	TX
	UNITIZATION AGREEMENT
	 	LION OIL COMPANY (OPERATOR) R MURRAY JOHNSON, L B JOHNSON,
MURRAY S JOHNSON (NON-OPERATOR)

	 	3/13/1950
	 	SCURRY
	 	TX
	RATIFICATION OF UNIT AGREEMENT
	 	LION OIL COMPANY, BURT BAUGH, IRENE BAUGH, PHIL N LANE,
J.R. CANNING AND MARJORIE CANNING

	 	8/25/1951
	 	SCURRY
	 	TX
	UNIT AGREEMENT
	 	LION OIL COMPANY, UNIT OPERATOR

	 	8/25/1951
	 	SCURRY
	 	TX
	UNIT AGREEMENT AND OPERATING AGREEMENT
	 	UNIT AGREEMENT AND OPERATING AGREEMENT BETWEEN LION OIL
COMPANY, AS OPERATOR AND GERTIE WILSON, ET AL, ROYALTY
OWNERS

	 	8/25/1951
	 	SCURRY
	 	TX
	UNIT AGREEMENT AS AMENDED / JOA
	 	LION OIL COMPANY / GERTIE WILSON, ET AL

	 	8/25/1951
	 	SCURRY
	 	TX
	UNIT AGREEMENT
	 	LION OIL COMPANY AND LESSORS

	 	12/1/1951
	 	SCURRY
	 	TX
	RATIFICATION OF UNIT AGREEMENT
	 	LION OIL COMPANY, M B ARICK, JACK PETOSKY AND J RAMON JONES

	 	6/12/1952
	 	SCURRY
	 	TX
	RATIFICATION OF UNIT AGREEMENT
	 	LION OIL COMPANY, ROBERT AINSLIE CANNING AND NANCY HOYT
CANNING

	 	6/27/1952
	 	SCURRY
	 	TX
	RATIFICATION OF UNIT AGREEMENT
	 	LION OIL COMPANY AND C.R. CRAIG

	 	7/7/1952
	 	SCURRY
	 	TX
	RATIFICATION OF UNIT AGREEMENT
	 	LION OIL COMPANY, HAMILTON MCRAE, J GORDON BRISTOW, TOMMY
HUTTO, PAUL SAWYER, CLEO SAWYER, S R COCKRELL, JACK MAXON
AND REV KIMBIS

	 	7/16/1952
	 	SCURRY
	 	TX
	RATIFICATION OF UNIT AGREEMENT
	 	LION OIL COMPANY AND SOUTHERN PETROLEUM EXPLORATION INC

	 	7/21/1952
	 	SCURRY
	 	TX
	RATIFICATION OF UNIT AGREEMENT
	 	LION OIL COMPANY AND J S ABERCROMBIE

	 	9/4/1952
	 	SCURRY
	 	TX
	RATIFICATION OF UNIT AGREEMENT
	 	LION OIL COMPANY AND E E FOGELSON

	 	11/20/1952
	 	SCURRY
	 	TX
	RATIFICATION OF UNIT AGREEMENT
	 	LION OIL COMPANY, R W KIMBRO, PAUL SAWYER, C R COCKRELL, J
GORDON BRISTOW, TOMMY HUTTO, HAMILTON MCRAE, JOHN S MAXON
AND JACK MAXON

	 	2/12/1953
	 	SCURRY
	 	TX
	RATIFICATION OF UNIT AGREEMENT
	 	LION OIL COMPANY AND SOUTHERN PETROLEUM EXPLORATION INC

	 	2/14/1953
	 	SCURRY
	 	TX
	RATIFICATION OF UNIT AGREEMENT
	 	LION OIL COMPANY AND E E FOGELSON

	 	2/20/1953
	 	SCURRY
	 	TX
	RATIFICATION OF UNIT AGREEMENT
	 	LION OIL COMPANY, T WEINER AND ROYBELL WEINER

	 	2/23/1953
	 	SCURRY
	 	TX
	RATIFICATION OF UNIT AGREEMENT
	 	LION OIL COMPANY AND FIRST NATIONAL BANK IN BIG SPRING

	 	2/24/1953
	 	SCURRY
	 	TX
	RATIFICATION OF UNIT AGREEMENT
	 	LION OIL COMPANY AND SNYDER NATIONAL BANK

	 	3/3/1953
	 	SCURRY
	 	TX
	RATIFICATION OF UNIT AGREEMENT
	 	LION OIL COMPANY AND J S ABERCROMBIE

	 	3/3/1953
	 	SCURRY
	 	TX
	RATIFICATION OF UNIT AGREEMENT
	 	LEMMIE WILSON ESTATE

	 	9/29/1953
	 	SCURRY
	 	TX
	JOINT OPERATING AGREEMENT
	 	MONSANTO / SUN PRODUCTION

	 	5/25/1982
	 	SCURRY
	 	TX
	AMENDMENT TO UNIT AGREEMENT ON ACCOUNTING
PROCEDURES
	 	BHP PETROLEUM

	 	11/10/1987
	 	SCURRY
	 	TX
	ASSIGNMENT
	 	AMOCO PRODUCTION COMPANY TO ENAQ INC

	 	6/10/1988
	 	SCURRY
	 	TX






PAGE 1 OF 3









 





EXHIBIT “D” — MATERIAL CONTRACTS

To Purchase and Sale Agreement by and between Diamond “M” Production Company, as Seller,

 and Parallel Petroleum Corporation and Ted Collins, Jr., as Buyer




	 	 	 	 	 	 	 	 	 
	DOCUMENT	 	PARTIES	 	DATE	 	COUNTY	 	ST
	WATER DISPOSAL AND SUPPLY AGREEMENT
	 	SUN OPERATING LTD PARTNERSHIP / BHP PETROLEUM

	 	11/1/1989
	 	SCURRY
	 	TX
	ASSIGNMENT, BILL OF SALE AND CONVEYANCE
	 	BHP PETROLEUM (AMERICAS) INC (ASSIGNOR) AND L B SIMMONS
ENERGY INC (ASSIGNEE)

	 	10/1/1991
	 	SCURRY
	 	TX
	PURCHASE AND SALE AGREEMENT
	 	PURCHASE AND SALE AGREEMENT BETWEEN BHP PETROLEUM
(AMERICAS) INC AND L B. SIMMONS ENERGY, INC.

	 	11/6/1991
	 	SCURRY
	 	TX
	ASSIGNMENT AND BILL OF SALE
	 	OXY USA INC (SELLER) AND L B SIMMONS ENERGY INC (BUYER)

	 	6/1/1992
	 	SCURRY
	 	TX
	ASSIGNMENT AND BILL OF SALE
	 	VIRGIE M GRAY (ASSIGNOR) AND L B SIMMONS ENERGY INC
(ASSIGNEE)

	 	6/1/1992
	 	SCURRY
	 	TX
	ASSIGNMENT AND BILL OF SALE
	 	EMBER OIL COMPANY (ASSIGNOR) AND L B SIMMONS ENERGY INC
(ASSIGNEE)

	 	6/1/1992
	 	SCURRY
	 	TX
	ASSIGNMENT AND BILL OF SALE
	 	STEVE TALBOTT D/B/A ENERGY SEARCH CO ET UX JANE M TALBOTT
(ASSIGNOR) AND L B SIMMONS ENERGY INC (ASSIGNEE)

	 	6/1/1992
	 	SCURRY
	 	TX
	ASSIGNMENT AND BILL OF SALE
	 	GORDON GRAY ET UX BARBARA GRAY (ASSIGNOR) AND L B SIMMONS
ENERGY INC (ASSIGNEE)

	 	6/1/1992
	 	SCURRY
	 	TX
	ASSIGNMENT AND BILL OF SALE
	 	MELVIN A ELLIS ET UX VERA FERN ELLIS (ASSIGNOR) AND L B
SIMMONS ENERGY INC (ASSIGNEE)

	 	6/1/1992
	 	SCURRY
	 	TX
	ASSIGNMENT AND BILL OF SALE
	 	VERGIE M GRAY (ASSIGNOR) AND L B SIMMONS ENERGY INC
(ASSIGNEE)

	 	6/1/1992
	 	SCURRY
	 	TX
	ASSIGNMENT AND BILL OF SALE
	 	STARKEY OILFIELD SERVICES INC (ASSIGNOR) AND L B SIMMONS
ENERGY INC (ASSIGNEE)

	 	9/1/1992
	 	SCURRY
	 	TX
	UNIT AGREEMENT
	 	DIAMOND M G-C-W UNIT

	 	12/1/1992
	 	SCURRY
	 	TX
	UNIT AGREEMENT
	 	L B SIMMONS ENERGY INC (OPERATOR) AND DIAMOND “M”
FOUNDATION INC ET AL (NON-OPERATORS)

	 	12/1/1992
	 	SCURRY
	 	TX
	UNIT AGREEMENT
	 	L B SIMMONS ENERGY INC, UNIT OPERATOR

	 	12/1/1992
	 	SCURRY
	 	TX
	CERTIFICATE OF EXTENSION OF TERMINATION
	 	L B SIMMONS ENERGY INC (UNIT OPERATOR)

	 	12/29/1992
	 	SCURRY
	 	TX
	CERTIFICATE OF UNITIZATION
	 	L B SIMMONS ENERGY INC (OPERATOR)

	 	3/1/1993
	 	SCURRY
	 	TX
	WATER LEASE
	 	ROBERT AND KATHY FOWLER / L B SIMMONS

	 	4/6/1993
	 	SCURRY
	 	TX
	ASSIGNMENT, BILL OF SALE AND CONVEYANCE
	 	MARK J MOURNE D/B/A/ MOURNE OIL AND GAS AND WADI PETROLEUM
INC

	 	9/1/1993
	 	SCURRY
	 	TX
	ASSIGNMENT AND BILL OF SALE
	 	SMITH ENTERPRISES INC (ASSIGNOR) AND L B SIMMONS ENERGY
INC (ASSIGNEE)

	 	5/1/1995
	 	SCURRY
	 	TX
	ASSIGNMENT, BILL OF SALE AND CONVEYANCE
	 	L B SIMMONS ENERGY INC (SELLER) AND DIAMOND “M” PRODUCTION
COMPANY (BUYER)

	 	7/1/1996
	 	SCURRY
	 	TX
	ASSIGNMENT AND BILL OF SALE
	 	MAYNARD OIL COMPANY AND QUESTAR EXPLORATION AND PRODUCTION
CO

	 	11/1/1999
	 	SCURRY
	 	TX
	ASSIGNMENT OF OIL, GAS AND MINERAL LEASES
	 	ENAQ INC TO DIAMOND “M” PRODUCTION COMPANY

	 	10/1/2000
	 	SCURRY
	 	TX
	ASSIGNMENT AND BILL OF SALE
	 	HUNT INDUSTRIES LTD TO DIAMOND “M” PRODUCTION COMPANY

	 	12/1/2000
	 	SCURRY
	 	TX
	ASSIGNMENT AND BILL OF SALE
	 	LYDA HUNT-MARGARET TRUST ET AL / DIAMOND “M”

	 	12/1/2000
	 	SCURRY
	 	TX
	ASSIGNMENT AND BILL OF SALE
	 	DIAMOND M PRODUCTION CO / ESTATE OF MILDRED GALVIN LARSON

	 	3/1/2001
	 	SCURRY
	 	TX
	TRADE AGREEMENT AND JOINT OPERATING AGREEMENT
	 	DIAMOND “M” PRODUCTION COMPANY, PARALLEL PETROLEUM
CORPORATION, BAYTECH, L.L.P. AND PATRIOT RESOURCES, INC.

	 	12/10/2001
	 	SCURRY
	 	TX






PAGE 2 OF 3









 




EXHIBIT “D” — MATERIAL CONTRACTS

To Purchase and Sale Agreement by and between Diamond “M” Production Company, as Seller, 

and Parallel Petroleum Corporation and Ted Collins, Jr., as Buyer




	 	 	 	 	 	 	 	 	 
	DOCUMENT	 	PARTIES	 	DATE	 	COUNTY	 	ST
	UNIVERSAL ASSIGNMENT & CONVEYANCE OF OIL, GAS AND
MINERAL INTERESTS
	 	BANK OF AMERICA TRUSTEE OF TAYLOR NIBLACK TRUST

	 	4/1/2002
	 	SCURRY
	 	TX
	OPERATING AGREEMENT
	 	PATRIOT RESOURCES INC ET AL AND DIAMOND “M” PRODUCTION
COMPANY

	 	8/20/2002
	 	SCURRY
	 	TX
	ASSIGNMENT CONVEYANCE AND BILL OF SALE
	 	WADI PETROLEUM INC TO DIAMOND “M” PRODUCTION COMPANY

	 	9/1/2002
	 	SCURRY
	 	TX
	ASSIGNMENT AND BILL OF SALE
	 	PETRO VAUGHN INC / DIAMOND “M”

	 	11/1/2002
	 	SCURRY
	 	TX
	PARTIAL ASSIGNMENT OF OIL AND GAS LEASES
	 	DIAMOND “M” PRODUCTION COMPANY TO PARALLEL PETROLEUM
CORPORATION

	 	7/1/2003
	 	SCURRY
	 	TX
	LEASE AGREEMENT
	 	DIAMOND “M” PRODUCTION COMPANY TO PARALLEL PETROLEUM
CORPORATION

	 	11/1/2003
	 	SCURRY
	 	TX
	ASSIGNMENT, BILL OF SALE AND CONVEYANCE
	 	LOYAL TRUST #1, LOYAL TRUST NO 2, LOYAL TRUST NO 3 AND
LOYAL TRUST NO 4 TO HUNT OIL COMPANY

	 	1/31/1990
	 	SCURRY
	 	TX
	ASSIGNMENT AND BILL OF SALE
	 	BOYD & MCWILLIAMS ENERGY GROUP INC AND MICHAEL M WILLIAMS
(ASSIGNOR) AND L B SIMMONS (ASSIGNEE)

	 	11/1/1994 EFFECTIVE

10/1/1994
	 	SCURRY
	 	TX
	PURCHASE AND SALE AGREEMENT
	 	L B SIMMONS ENERGY INC (SELLER) AND SOUTHWESTERN ENERGY
PRODUCTION COMPANY AND DIAMOND “M” PRODUCTION COMPANY
(BUYER)

	 	11/1/1996 EFFECTIVE 7/1/1996
	 	SCURRY
	 	TX
	ASSIGNMENT, BILL OF SALE AND CONVEYANCE
	 	L B SIMMONS ENERGY INC (GRANTOR) TO DIAMOND “M” PRODUCTION
COMPANY (GRANTEE)

	 	11/1/1996 EFFECTIVE 7/1/1996
	 	SCURRY
	 	TX
	ASSIGNMENT AND BILL OF SALE
	 	SMITH ENTERPRISES INC (ASSIGNOR) AND L B SIMMONS ENERGY
INC (ASSIGNEE)

	 	11/21/1994 EFFECTIVE

10/1/1994
	 	SCURRY
	 	TX
	CORRECTION ASSIGNMENT AND BILL OF SALE
	 	VERGIE M GRAY (ASSIGNOR) AND L B SIMMONS ENERGY INC
(ASSIGNEE)

	 	11/30/1992 EFFECTIVE

6/1/1992
	 	SCURRY
	 	TX
	ASSIGNMENT AND BILL OF SALE
	 	LYDA HUNT-MARGARET TRUST — LYDA HILL, LYDA HUNT-MARGARET
TRUST — A; L G HILL JR, LYDA HUNT-MARGARET TRUST — ALINDA
HUNT HILL (ASSIGNORS) AND CONDOR PETROLEUM INC (ASSIGNEE)

	 	11/4/2002 EFFECTIVE

12/1/2002
	 	SCURRY
	 	TX
	ASSIGNMENT OF CONTRACTUAL INTEREST AND BILL OF SALE
	 	DIAMOND “M” / KINDER MORGAN

	 	3/1/2002 EFFECTIVE 1/13/2002
	 	SCURRY
	 	TX
	RATIFICATION OF UNIT AGREEMENT
	 	LION OIL COMPANY / DIAMOND “M”

	 	3/28/1953 EFFECTIVE

8/25/1951
	 	SCURRY
	 	TX
	ASSIGNMENT AND BILL OF SALE
	 	SMITH ENTERPRISES INC (ASSIGNOR) AND L B SIMMONS ENERGY
INC (ASSIGNEE)

	 	4/26/1995 EFFECTIVE 5/1/1995
	 	SCURRY
	 	TX
	UNIT AGREEMENT
	 	LION OIL COMPANY

	 	5/8/1959 RECORDED 6/24/1959
	 	SCURRY
	 	TX
	ASSIGNMENT OF OVERRIDING ROYALTY
	 	L B SIMMONS ENERGY INC TO ROBERT B STALLWORTH TRUST

	 	7/28/1993 EFFECTIVE 3/1/1993
	 	SCURRY
	 	TX
	RATIFICATION OF UNIT AGREEMENT
	 	LION OIL COMPANY AND ROYBELLE P WEINER

	 	8/2/1952
	 	SCURRY
	 	TX
	RATIFICATION OF UNIT AGREEMENT
	 	LION OIL COMPANY ET AL, MARJORIE CANNING, C R CRAIG, 

ROBERT CANNING, NANCY CANNING, JACK PETOSKY

	 	8/25/1951 EFFECTIVE

6/17/1952
	 	SCURRY
	 	TX
	RATIFICATION OF UNIT AGREEMENT
	 	LION OIL COMPANY, DIAMOND “M” PRODUCTION COMPANY

	 	8/31/1953 EFFECTIVE

8/25/1951
	 	SCURRY
	 	TX







PAGE 3 OF 3











 





EXHIBIT E




To Purchase and Sale Agreement

by and between

Diamond “M” Production Company, as Seller,

and

Parallel Petroleum Corporation and Ted Collins, Jr., as Buyer




NON-FOREIGN AFFIDAVIT




Exemption from Withholding of Tax For

Dispositions of U.S. Real Property Interests




     Article 1445 of the Internal Revenue Code provides that a transferee of a U.S. real property
interest must withhold tax if the transferor is a foreign person. To inform Lime Rock Resources A,
L.P. that withholding of tax is not required upon the disposition of a U.S. real property interest
by Diamond “M” Production Company (“DMPC”), the undersigned hereby certifies the following:




     1. DMPC is not a nonresident alien, foreign corporation, foreign partnership, foreign
trust, or foreign estate for purposes of U.S. income taxation;




     2. DMPC’s taxpayer identifying number is 71-0358796; and




     3. DMPC’s home office address is 2350 N. Sam Houston Parkway East, Suite 125, Houston,
Texas 77032.



     DMPC understands that this certification may be disclosed to the Internal Revenue Service by
Lime Rock Resources A, L.P. and that any false statement contained herein could be punished by
fine, imprisonment, or both.



     Under penalties of perjury, I declare that I have examined this certification and, to the best
of my knowledge and belief, it is true, correct and complete, and I further declare I have
authority to sign this document.



	 	 	 	 	 
	 	 	DIAMOND “M” PRODUCTION COMPANY
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:
	 	Richard F. Lane
	 

	 	Title:
	 	President






E-1









 






	 	 	 	 	 
	STATE OF TEXAS

	 	§
	 	 
	 

	 	§	 	 
	COUNTY OF HARRIS

	 	§	 	 






     The foregoing instrument was acknowledged before me this                      day of                                 
        , 2008,
by Richard F. Lane, President of Diamond “M” Production Company, a Delaware corporation, on behalf
of said corporation.



	 	 	 
	 

	 	 
	 

	 	Notary Public in and for the State of Texas






E-2









 





EXHIBIT F




To Purchase and Sale Agreement

by and between

Diamond “M” Production Company, as Seller,

and

Parallel Petroleum Corporation and Ted Collins, Jr., as Buyer




EXCLUDED PROPERTIES



Vehicles and associated equipment.




F-1









 





EXHIBIT G




To Purchase and Sale Agreement

by and between

Diamond “M” Production Company, as Seller,

and

Parallel Petroleum Corporation and Ted Collins, Jr., as Buyer




ALLOCATION OF PURCHASE PRICE



To be attached.





G-1









 






EXHIBIT “G”




To Purchase and Sale Agreement by and between Diamond “M” Production Company, as Seller, 

and Parallel Petroleum
Corporation and Ted Collins, Jr., as Buyer




 

SOUTHWESTERN ENERGY PERMIAN PACKAGE

PURCHASE PRICE ALLOCATION

DIAMOND -M- PROPERTIES




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	Net	 	 	Allocated	 
	 	 	 	 	 	 	 	 	Working	 	 	Revenue	 	 	Purchase Price	 
	 	 	 	 	 	 	 	 	Interest	 	 	Interest	 	 	Value	 
	Rsv Cat	 	Prop#	 	Field	 	Lease	 	%	 	 	%	 	 	M$	 
	1PDP
	 	J4LIFI5J2F	 	DIAMOND -M- (GCW)	 	BYNUM 0101	 	 	0.0000	%	 	 	0.3846	%	 	$	14.684	 
	1PDP
	 	TXO08A067657	 	DIAMOND -M- (GCW)	 	BYNUM 0101	 	 	0.0000	%	 	 	0.3846	%	 	$	14.684	 
	1PDP
	 	J49FN2SOQQ	 	DIAMOND -M- (GCW)	 	GCW WATERFLOOD EXPENSES	 	 	25.0000	%	 	 	21.3810	%	 	$	—	 
	1PDP
	 	J4J0A9WAVK	 	DIAMOND -M- (GCW)	 	GCWU BASE	 	 	100.0000	%	 	 	85.5240	%	 	$	7,532.290	 
	1PDP
	 	J4JG9RRP6T	 	DIAMOND -M- (GCW)	 	GCWU WEDGE	 	 	25.0000	%	 	 	21.3810	%	 	$	436.083	 
	1PDP
	 	J49FNATOVQ	 	DIAMOND -M- (GCW)	 	GERTIE  5	 	 	25.0000	%	 	 	21.3810	%	 	$	355.944	 
	1PDP
	 	J49FO03IQQ	 	DIAMOND -M- (GCW)	 	GERTIE  7	 	 	25.0000	%	 	 	21.8750	%	 	$	606.396	 
	1PDP
	 	J49FNIPO6Q	 	DIAMOND -M- (GCW)	 	JACK  36	 	 	25.0000	%	 	 	21.3810	%	 	$	3.140	 
	1PDP
	 	J49FNIHP7Q	 	DIAMOND -M- (GCW)	 	JACK  37	 	 	25.0000	%	 	 	21.3810	%	 	$	0.438	 
	1PDP
	 	J49FO0AIPQ	 	DIAMOND -M- (GCW)	 	JACK  38	 	 	25.0000	%	 	 	21.3810	%	 	$	29.163	 
	1PDP
	 	J49FNILQ9Q	 	DIAMOND -M- (GCW)	 	JACK  39	 	 	25.0000	%	 	 	21.3810	%	 	$	0.096	 
	1PDP
	 	J49FO08HOQ	 	DIAMOND -M- (GCW)	 	JACK  40	 	 	25.0000	%	 	 	21.3810	%	 	$	16.527	 
	1PDP
	 	J49FNI5QBQ	 	DIAMOND -M- (GCW)	 	JACK  41	 	 	25.0000	%	 	 	21.3810	%	 	$	263.324	 
	1PDP
	 	J49FMFJG1Q	 	DIAMOND -M- (GCW)	 	MCL ACCT 1  108	 	 	25.0000	%	 	 	21.3810	%	 	$	3.721	 
	1PDP
	 	J49FM15Q4Q	 	DIAMOND -M- (GCW)	 	MCL ACCT 1  130	 	 	25.0000	%	 	 	21.8750	%	 	$	21.532	 
	1PDP
	 	J49FM11S7Q	 	DIAMOND -M- (GCW)	 	MCL ACCT 1  134	 	 	25.0000	%	 	 	21.3810	%	 	$	16.837	 
	1PDP
	 	J49FM1RS8Q	 	DIAMOND -M- (GCW)	 	MCL ACCT 1  135	 	 	25.0000	%	 	 	21.3810	%	 	$	34.536	 
	1PDP
	 	J49FMEJKVQ	 	DIAMOND -M- (GCW)	 	MCL ACCT 1  136	 	 	25.0000	%	 	 	21.3810	%	 	$	27.541	 
	1PDP
	 	J49FM53KGQ	 	DIAMOND -M- (GCW)	 	MCL ACCT 2  139	 	 	25.0000	%	 	 	21.3810	%	 	$	326.560	 
	1PDP
	 	J49FLPPS6Q	 	DIAMOND -M- (GCW)	 	MCL ACCT 2  140	 	 	25.0000	%	 	 	21.8750	%	 	$	214.639	 
	1PDP
	 	J49G3BH338	 	DIAMOND -M- (GCW)	 	MCL ACCT 2  83	 	 	25.0000	%	 	 	21.3810	%	 	$	73.889	 
	1PDP
	 	J4JCL5IJ3A	 	DIAMOND -M- (GCW)	 	OUTSIDE UNIT BASE	 	 	100.0000	%	 	 	87.5000	%	 	$	4,346.532	 
	1PDP
	 	J4JG8NWU5T	 	DIAMOND -M- (GCW)	 	OUTSIDE UNIT WEDGE	 	 	25.0000	%	 	 	21.8750	%	 	$	86.158	 
	1PDP
	 	J49FNT4UKQ	 	DIAMOND -M- (GCW)	 	THURSTON 14	 	 	25.0000	%	 	 	21.3810	%	 	$	665.157	 
	1PDP
	 	J49M7T6M1P	 	DIAMOND -M- (LDMU)	 	LDMU 1	 	 	24.8782	%	 	 	21.6352	%	 	$	2.169	 
	1PDP
	 	J49DI423SA	 	DIAMOND -M- (LDMU)	 	LDMU E-11A	 	 	24.8782	%	 	 	21.6352	%	 	$	188.231	 
	1PDP
	 	J49DI3E1RE	 	DIAMOND -M- (LDMU)	 	LDMU F-1A	 	 	24.8782	%	 	 	21.6352	%	 	$	52.916	 
	1PDP
	 	J43H7EJQ11	 	DIAMOND -M- (LDMU)	 	LDMU G7A	 	 	24.8782	%	 	 	21.6352	%	 	$	593.742	 
	1PDP
	 	J49DHTV8OG	 	DIAMOND -M- (LDMU)	 	LDMU H-1	 	 	24.8782	%	 	 	21.6352	%	 	$	246.358	 
	1PDP
	 	J49DHMC8MG	 	DIAMOND -M- (LDMU)	 	LDMU I-1	 	 	24.8782	%	 	 	21.6352	%	 	$	62.515	 
	1PDP
	 	J49DHK9ELX	 	DIAMOND -M- (LDMU)	 	LDMU I-2W	 	 	24.8782	%	 	 	21.6352	%	 	$	342.486	 
	1PDP
	 	J49DHJNCKE	 	DIAMOND -M- (LDMU)	 	LDMU I-3	 	 	24.8782	%	 	 	21.6352	%	 	$	746.251	 
	1PDP
	 	J49DHIQBJ7	 	DIAMOND -M- (LDMU)	 	LDMU I-3W	 	 	24.8782	%	 	 	21.6352	%	 	$	0.845	 
	1PDP
	 	J49DHHS8II	 	DIAMOND -M- (LDMU)	 	LDMU I-4	 	 	24.8782	%	 	 	21.6352	%	 	$	1,126.053	 
	1PDP
	 	J49DH02BDG	 	DIAMOND -M- (LDMU)	 	LDMU K-10	 	 	24.8782	%	 	 	21.6352	%	 	$	4.965	 
	1PDP
	 	J49DHRX5BG	 	DIAMOND -M- (LDMU)	 	LDMU K-4W	 	 	24.8782	%	 	 	21.6352	%	 	$	734.723	 
	1PDP
	 	J49DHP009G	 	DIAMOND -M- (LDMU)	 	LDMU L-2	 	 	24.8782	%	 	 	21.6352	%	 	$	214.114	 
	1PDP
	 	J49DHN748G	 	DIAMOND -M- (LDMU)	 	LDMU L-3	 	 	24.8782	%	 	 	21.6352	%	 	$	0.408	 
	1PDP
	 	J43HKLRT1Q	 	DIAMOND -M- (LDMU)	 	LDMU L3A	 	 	24.8782	%	 	 	21.6352	%	 	$	618.927	 
	1PDP
	 	J49DHMT37G	 	DIAMOND -M- (LDMU)	 	LDMU L-4	 	 	24.8782	%	 	 	21.6352	%	 	$	522.747	 
	1PDP
	 	J49DHJU55K	 	DIAMOND -M- (LDMU)	 	LDMU M-1	 	 	24.8782	%	 	 	21.6352	%	 	$	184.282	 
	1PDP
	 	J49DHIM24K	 	DIAMOND -M- (LDMU)	 	LDMU M-1W	 	 	24.8782	%	 	 	21.6352	%	 	$	705.512	 
	1PDP
	 	J49DHGN03P	 	DIAMOND -M- (LDMU)	 	LDMU M-4	 	 	24.8782	%	 	 	21.6352	%	 	$	84.165	 
	1PDP
	 	J49DI1R5QE	 	DIAMOND -M- (LDMU)	 	LDMU BASE	 	 	99.5130	%	 	 	86.5407	%	 	$	11,270.396	 
	1PDP
	 	J49DFFJ21J	 	DIAMOND -M- (LDMU)	 	LDMU WATERFLOOD EXPENSES	 	 	24.8782	%	 	 	21.6352	%	 	$	—	 
	1PDP
	 	J4HM47G2KF	 	DIAMOND -M- (LDMU)	 	LDMU WEDGE	 	 	24.8782	%	 	 	21.6352	%	 	$	268.821	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	TOTALPROVED DEVELOPED PRODUCING	 	 	 	 	 	 	 	 	 	$	33,060.499	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	TOTAL PROVED DEVELOPED NONPRODUCING	 	 	 	 	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	4PUD
	 	J4AMKD8J2X	 	DIAMOND -M- (GCW)	 	DUAL INJECTION STRINGS 0001	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J4AMNJPMLR	 	DIAMOND -M- (GCW)	 	DUAL INJECTION STRINGS 0002	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J4AMNI5JKR	 	DIAMOND -M- (GCW)	 	DUAL INJECTION STRINGS 0003	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J4AMNHKHJS	 	DIAMOND -M- (GCW)	 	DUAL INJECTION STRINGS 0004	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J4AMNF6MIS	 	DIAMOND -M- (GCW)	 	DUAL INJECTION STRINGS 0005	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J4AMNE7KHS	 	DIAMOND -M- (GCW)	 	DUAL INJECTION STRINGS 0006	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J4AMNDTJGT	 	DIAMOND -M- (GCW)	 	DUAL INJECTION STRINGS 0007	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J4AMNCNGFT	 	DIAMOND -M- (GCW)	 	DUAL INJECTION STRINGS 0008	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J4AMNA2LET	 	DIAMOND -M- (GCW)	 	DUAL INJECTION STRINGS 0009	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J4AMN9JIDU	 	DIAMOND -M- (GCW)	 	DUAL INJECTION STRINGS 0010	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J4AMN8CGCV	 	DIAMOND -M- (GCW)	 	DUAL INJECTION STRINGS 0011	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J4AMN6BJBV	 	DIAMOND -M- (GCW)	 	DUAL INJECTION STRINGS 0012	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J4AMN4JIAV	 	DIAMOND -M- (GCW)	 	DUAL INJECTION STRINGS 0013	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J4AMN37G9V	 	DIAMOND -M- (GCW)	 	DUAL INJECTION STRINGS 0014	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 






 









 





To Purchase and Sale Agreement by and between Diamond “M” Production Company, as Seller, 
and Parallel Petroleum
Corporation and Ted Collins, Jr., as Buyer




 

SOUTHWESTERN ENERGY PERMIAN PACKAGE

PURCHASE PRICE ALLOCATION

DIAMOND -M- PROPERTIES





	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	Net	 	 	Allocated	 
	 	 	 	 	 	 	 	 	Working	 	 	Revenue	 	 	Purchase Price	 
	 	 	 	 	 	 	 	 	Interest	 	 	Interest	 	 	Value	 
	Rsv Cat	 	Prop#	 	Field	 	Lease	 	%	 	 	%	 	 	M$	 
	4PUD
	 	J4AMN19H8W	 	DIAMOND -M- (GCW)	 	DUAL INJECTION STRINGS 0015	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J4AMN0PG7W	 	DIAMOND -M- (GCW)	 	DUAL INJECTION STRINGS 0016	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J4AMMSCT6X	 	DIAMOND -M- (GCW)	 	DUAL INJECTION STRINGS 0017	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J4AMMRQR5X	 	DIAMOND -M- (GCW)	 	DUAL INJECTION STRINGS 0018	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J4AMMP3U4X	 	DIAMOND -M- (GCW)	 	DUAL INJECTION STRINGS 0019	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J4AMMNDQ3X	 	DIAMOND -M- (GCW)	 	DUAL INJECTION STRINGS 0020	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J4AGE8SKUP	 	DIAMOND -M- (GCW)	 	GCW WATERFLOOD EXPENSE PUD	 	 	24.9000	%	 	 	21.6567	%	 	$	—	 
	4PUD
	 	J2PDLGC9XS	 	DIAMOND -M- (GCW)	 	GCWU GLORIETTA/CLFK PUD 0001	 	 	24.9000	%	 	 	21.6567	%	 	$	24.742	 
	4PUD
	 	J48GOONKU1	 	DIAMOND -M- (GCW)	 	GCWU GLORIETTA/CLFK PUD 0002	 	 	24.9000	%	 	 	21.6567	%	 	$	24.742	 
	4PUD
	 	J48GON3IT1	 	DIAMOND -M- (GCW)	 	GCWU GLORIETTA/CLFK PUD 0003	 	 	24.9000	%	 	 	21.6567	%	 	$	24.742	 
	4PUD
	 	J48GOLGMS1	 	DIAMOND -M- (GCW)	 	GCWU GLORIETTA/CLFK PUD 0004	 	 	24.9000	%	 	 	21.6567	%	 	$	24.742	 
	4PUD
	 	J48GOKPKR1	 	DIAMOND -M- (GCW)	 	GCWU GLORIETTA/CLFK PUD 0005	 	 	24.9000	%	 	 	21.6567	%	 	$	24.742	 
	4PUD
	 	J48GOJ3IQ1	 	DIAMOND -M- (GCW)	 	GCWU GLORIETTA/CLFK PUD 0006	 	 	24.9000	%	 	 	21.6567	%	 	$	24.742	 
	4PUD
	 	J48GOISGP1	 	DIAMOND -M- (GCW)	 	GCWU GLORIETTA/CLFK PUD 0007	 	 	24.9000	%	 	 	21.6567	%	 	$	24.742	 
	4PUD
	 	J48GOGNKO1	 	DIAMOND -M- (GCW)	 	GCWU GLORIETTA/CLFK PUD 0008	 	 	24.9000	%	 	 	21.6567	%	 	$	24.742	 
	4PUD
	 	J48GOF1IN1	 	DIAMOND -M- (GCW)	 	GCWU GLORIETTA/CLFK PUD 0009	 	 	24.9000	%	 	 	21.6567	%	 	$	24.742	 
	4PUD
	 	J48GOESGM1	 	DIAMOND -M- (GCW)	 	GCWU GLORIETTA/CLFK PUD 0010	 	 	24.9000	%	 	 	21.6567	%	 	$	24.742	 
	4PUD
	 	J48GOCULL1	 	DIAMOND -M- (GCW)	 	GCWU GLORIETTA/CLFK PUD 0011	 	 	24.9000	%	 	 	21.6567	%	 	$	24.742	 
	4PUD
	 	J48GOBDIK1	 	DIAMOND -M- (GCW)	 	GCWU GLORIETTA/CLFK PUD 0012	 	 	24.9000	%	 	 	21.6567	%	 	$	24.742	 
	4PUD
	 	J48GO96MJ1	 	DIAMOND -M- (GCW)	 	GCWU GLORIETTA/CLFK PUD 0013	 	 	24.9000	%	 	 	21.6567	%	 	$	24.742	 
	4PUD
	 	J48GO8NGI1	 	DIAMOND -M- (GCW)	 	GCWU GLORIETTA/CLFK PUD 0014	 	 	24.9000	%	 	 	21.6567	%	 	$	24.742	 
	4PUD
	 	J2RGBK163O	 	DIAMOND -M- (GCW)	 	REPLACE 4 TANKS 0001	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J2RG8GU11R	 	DIAMOND -M- (LDMU)	 	DEEPENING/RE-ENTRIES FOR WIW SUPPORT 0001	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J2QJM8O2J5	 	DIAMOND -M- (LDMU)	 	DEEPENING/RE-ENTRIES FOR WIW SUPPORT 0002	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J2QJM5Q3I5	 	DIAMOND -M- (LDMU)	 	DEEPENING/RE-ENTRIES FOR WIW SUPPORT 0003	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J2QJLRF8H6	 	DIAMOND -M- (LDMU)	 	DEEPENING/RE-ENTRIES FOR WIW SUPPORT 0004	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J2QJLN2DG6	 	DIAMOND -M- (LDMU)	 	DEEPENING/RE-ENTRIES FOR WIW SUPPORT 0005	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J2QJLM0CF6	 	DIAMOND -M- (LDMU)	 	DEEPENING/RE-ENTRIES FOR WIW SUPPORT 0006	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J2QJLLH9E6	 	DIAMOND -M- (LDMU)	 	DEEPENING/RE-ENTRIES FOR WIW SUPPORT 0007	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J2QJLJWED7	 	DIAMOND -M- (LDMU)	 	DEEPENING/RE-ENTRIES FOR WIW SUPPORT 0008	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J2QJLISCC7	 	DIAMOND -M- (LDMU)	 	DEEPENING/RE-ENTRIES FOR WIW SUPPORT 0009	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J2QJLH8BB8	 	DIAMOND -M- (LDMU)	 	DEEPENING/RE-ENTRIES FOR WIW SUPPORT 0010	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J2QJLF5BA8	 	DIAMOND -M- (LDMU)	 	DEEPENING/RE-ENTRIES FOR WIW SUPPORT 0011	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J2QJLE1A98	 	DIAMOND -M- (LDMU)	 	DEEPENING/RE-ENTRIES FOR WIW SUPPORT 0012	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J2QJLCGE88	 	DIAMOND -M- (LDMU)	 	DEEPENING/RE-ENTRIES FOR WIW SUPPORT 0013	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J2QJLB2D78	 	DIAMOND -M- (LDMU)	 	DEEPENING/RE-ENTRIES FOR WIW SUPPORT 0014	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J2QJLAOB69	 	DIAMOND -M- (LDMU)	 	DEEPENING/RE-ENTRIES FOR WIW SUPPORT 0015	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J2QJL9X959	 	DIAMOND -M- (LDMU)	 	DEEPENING/RE-ENTRIES FOR WIW SUPPORT 0016	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J2QJL79E49	 	DIAMOND -M- (LDMU)	 	DEEPENING/RE-ENTRIES FOR WIW SUPPORT 0017	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J2QJL67839	 	DIAMOND -M- (LDMU)	 	DEEPENING/RE-ENTRIES FOR WIW SUPPORT 0018	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J2QJL4C829	 	DIAMOND -M- (LDMU)	 	DEEPENING/RE-ENTRIES FOR WIW SUPPORT 0019	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J4A0FIW2ER	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2008 Q1 PUD 0001	 	 	24.9000	%	 	 	21.6567	%	 	$	91.049	 
	4PUD
	 	J2QIAJ2JB1	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2008 Q1 PUD 0002	 	 	24.9000	%	 	 	21.6567	%	 	$	91.049	 
	4PUD
	 	J2QIAHWMA1	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2008 Q1 PUD 0003	 	 	24.9000	%	 	 	21.6567	%	 	$	91.049	 
	4PUD
	 	J2QIAGNK91	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2008 Q1 PUD 0004	 	 	24.9000	%	 	 	21.6567	%	 	$	91.049	 
	4PUD
	 	J2QIAFXH81	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2008 Q1 PUD 0005	 	 	24.9000	%	 	 	21.6567	%	 	$	91.049	 
	4PUD
	 	J2QIADPK71	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2008 Q1 PUD 0006	 	 	24.9000	%	 	 	21.6567	%	 	$	91.049	 
	4PUD
	 	J2QIACHH61	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2008 Q4 PUD 0001	 	 	24.9000	%	 	 	21.6567	%	 	$	91.049	 
	4PUD
	 	J2QIA6QJ51	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2008 Q4 PUD 0002	 	 	24.9000	%	 	 	21.6567	%	 	$	91.049	 
	4PUD
	 	J2QIA4MM41	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2008 Q4 PUD 0003	 	 	24.9000	%	 	 	21.6567	%	 	$	91.049	 
	4PUD
	 	J2QIA3EH31	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2008 Q4 PUD 0004	 	 	24.9000	%	 	 	21.6567	%	 	$	91.049	 
	4PUD
	 	J2QIA1AK21	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2008 Q4 PUD 0005	 	 	24.9000	%	 	 	21.6567	%	 	$	91.049	 
	4PUD
	 	J2QI9TAO11	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2008 Q4 PUD 0006	 	 	24.9000	%	 	 	21.6567	%	 	$	91.049	 
	4PUD
	 	J2QIM1QJCZ	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2009 PUD 0001	 	 	24.9000	%	 	 	21.6567	%	 	$	91.049	 
	4PUD
	 	J2QIRFRLZX	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2009 PUD 0002	 	 	24.9000	%	 	 	21.6567	%	 	$	91.049	 
	4PUD
	 	J2QIRELJYX	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2009 PUD 0003	 	 	24.9000	%	 	 	21.6567	%	 	$	91.049	 
	4PUD
	 	J2QIRD7GXX	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2009 PUD 0004	 	 	24.9000	%	 	 	21.6567	%	 	$	91.049	 
	4PUD
	 	J2QIRB2LWY	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2009 PUD 0005	 	 	24.9000	%	 	 	21.6567	%	 	$	91.049	 
	4PUD
	 	J2QIR1DKPY	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2009 PUD 0006	 	 	24.9000	%	 	 	21.6567	%	 	$	91.049	 
	4PUD
	 	J2PC71IJ2B	 	DIAMOND -M- (LDMU)	 	LDMU WATERFLOOD EXPENSE PUD	 	 	24.9000	%	 	 	21.6567	%	 	$	—	 
	4PUD
	 	J2QJFMH91E	 	DIAMOND -M- (LDMU)	 	NEW PRODUCTION SATELLITES 0001	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	4PUD
	 	J2RGA4192O	 	DIAMOND -M- (LDMU)	 	NEW PRODUCTION SATELLITES 0002	 	 	0.0000	%	 	 	0.0000	%	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	TOTAL Drilling Locations — Group I	 	 	 	 	 	 	 	 	 	 	 	$	1,985.277	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 






 









 





To Purchase and Sale Agreement by and between Diamond “M” Production Company, as Seller, 

and Parallel Petroleum
Corporation and Ted Collins, Jr., as Buyer




 

SOUTHWESTERN ENERGY PERMIAN PACKAGE

PURCHASE PRICE ALLOCATION

DIAMOND -M- PROPERTIES





	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	Net	 	 	Allocated	 
	 	 	 	 	 	 	 	 	Working	 	 	Revenue	 	 	Purchase Price	 
	 	 	 	 	 	 	 	 	Interest	 	 	Interest	 	 	Value	 
	Rsv Cat	 	Prop#	 	Field	 	Lease	 	%	 	 	%	 	 	M$	 
	5PRB
	 	J48GO6RLH1	 	DIAMOND -M- (GCW)	 	GCWU GLORIETTA/CLFK PUD 0015	 	 	24.9000	%	 	 	21.6567	%	 	$	85.438	 
	5PRB
	 	J48GO5IJG1	 	DIAMOND -M- (GCW)	 	GCWU GLORIETTA/CLFK PUD 0016	 	 	24.9000	%	 	 	21.6567	%	 	$	83.561	 
	5PRB
	 	J48GO4XHF1	 	DIAMOND -M- (GCW)	 	GCWU GLORIETTA/CLFK PUD 0017	 	 	24.9000	%	 	 	21.6567	%	 	$	81.731	 
	5PRB
	 	J48GO21ME1	 	DIAMOND -M- (GCW)	 	GCWU GLORIETTA/CLFK PUD 0018	 	 	24.9000	%	 	 	21.6567	%	 	$	78.843	 
	5PRB
	 	J48GO17KD1	 	DIAMOND -M- (GCW)	 	GCWU GLORIETTA/CLFK PUD 0019	 	 	24.9000	%	 	 	21.6567	%	 	$	77.142	 
	5PRB
	 	J48GO0JIC1	 	DIAMOND -M- (GCW)	 	GCWU GLORIETTA/CLFK PUD 0020	 	 	24.9000	%	 	 	21.6567	%	 	$	75.488	 
	5PRB
	 	J48GNTNOB1	 	DIAMOND -M- (GCW)	 	GCWU GLORIETTA/CLFK PUD 0021	 	 	24.9000	%	 	 	21.6567	%	 	$	73.877	 
	5PRB
	 	J48GNRCTA1	 	DIAMOND -M- (GCW)	 	GCWU GLORIETTA/CLFK PUD 0022	 	 	24.9000	%	 	 	21.6567	%	 	$	71.285	 
	5PRB
	 	J48GNQLR91	 	DIAMOND -M- (GCW)	 	GCWU GLORIETTA/CLFK PUD 0023	 	 	24.9000	%	 	 	21.6567	%	 	$	69.795	 
	5PRB
	 	J48GNPCP81	 	DIAMOND -M- (GCW)	 	GCWU GLORIETTA/CLFK PUD 0024	 	 	24.9000	%	 	 	21.6567	%	 	$	68.348	 
	5PRB
	 	J48GNNGU71	 	DIAMOND -M- (GCW)	 	GCWU GLORIETTA/CLFK PUD 0025	 	 	24.9000	%	 	 	21.6567	%	 	$	66.944	 
	5PRB
	 	J48GNMPS62	 	DIAMOND -M- (GCW)	 	GCWU GLORIETTA/CLFK PUD 0026	 	 	24.9000	%	 	 	21.6567	%	 	$	64.631	 
	5PRB
	 	J48GNKCP52	 	DIAMOND -M- (GCW)	 	GCWU GLORIETTA/CLFK PUD 0027	 	 	24.9000	%	 	 	21.6567	%	 	$	63.342	 
	5PRB
	 	J48GNIGU42	 	DIAMOND -M- (GCW)	 	GCWU GLORIETTA/CLFK PUD 0028	 	 	24.9000	%	 	 	21.6567	%	 	$	62.098	 
	5PRB
	 	J48GNHNS32	 	DIAMOND -M- (GCW)	 	GCWU GLORIETTA/CLFK PUD 0029	 	 	24.9000	%	 	 	21.6567	%	 	$	60.898	 
	5PRB
	 	J48GNFKT22	 	DIAMOND -M- (GCW)	 	GCWU GLORIETTA/CLFK PUD 0030	 	 	24.9000	%	 	 	21.6567	%	 	$	58.864	 
	5PRB
	 	J2QIR8GMUY	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2010 PUD 0001	 	 	24.9000	%	 	 	21.6567	%	 	$	250.736	 
	5PRB
	 	J2QIR7KLTY	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2010 PUD 0002	 	 	24.9000	%	 	 	21.6567	%	 	$	245.036	 
	5PRB
	 	J2QIR66ISY	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2010 PUD 0003	 	 	24.9000	%	 	 	21.6567	%	 	$	239.490	 
	5PRB
	 	J2QIR4CLRY	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2010 PUD 0004	 	 	24.9000	%	 	 	21.6567	%	 	$	234.094	 
	5PRB
	 	J2QIR3KHQY	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2010 PUD 0005	 	 	24.9000	%	 	 	21.6567	%	 	$	226.716	 
	5PRB
	 	J2QIRAOJVY	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2010 PUD 0006	 	 	24.9000	%	 	 	21.6567	%	 	$	221.701	 
	5PRB
	 	J2QIR0OIOY	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2011 PUD 0001	 	 	24.9000	%	 	 	21.6567	%	 	$	216.834	 
	5PRB
	 	J2QIQSWUNY	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2011 PUD 0002	 	 	24.9000	%	 	 	21.6567	%	 	$	212.114	 
	5PRB
	 	J2QIQRVSMY	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2011 PUD 0003	 	 	24.9000	%	 	 	21.6567	%	 	$	205.566	 
	5PRB
	 	J2QIQQTRLY	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2011 PUD 0004	 	 	24.9000	%	 	 	21.6567	%	 	$	201.217	 
	5PRB
	 	J2QIQPOQKY	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2011 PUD 0005	 	 	24.9000	%	 	 	21.6567	%	 	$	197.020	 
	5PRB
	 	J2QIQOPOJY	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2011 PUD 0006	 	 	24.9000	%	 	 	21.6567	%	 	$	192.981	 
	5PRB
	 	J2QIQM6UIY	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2012 PUD 0001	 	 	24.9000	%	 	 	21.6567	%	 	$	187.276	 
	5PRB
	 	J2QIQLLRHY	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2012 PUD 0002	 	 	24.9000	%	 	 	21.6567	%	 	$	183.653	 
	5PRB
	 	J2QIQJWUGY	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2012 PUD 0003	 	 	24.9000	%	 	 	21.6567	%	 	$	180.230	 
	5PRB
	 	J2QIQF0OFY	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2012 PUD 0004	 	 	24.9000	%	 	 	21.6567	%	 	$	177.048	 
	5PRB
	 	J2QIQD2REY	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2012 PUD 0005	 	 	24.9000	%	 	 	21.6567	%	 	$	171.781	 
	5PRB
	 	J2QIQCHPDY	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF 2012 PUD 0006	 	 	24.9000	%	 	 	21.6567	%	 	$	168.444	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	TOTAL Drilling Locations — Group II	 	 	 	 	 	 	 	 	 	 	 	$	4,854.223	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	6POS
	 	J4JKPTRH23	 	DIAMOND -M- (LDMU)	 	LDMU CANYON REEF CO2 FLOOD	 	 	24.9000	%	 	 	21.6567	%	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	TOTAL Drilling Locations — Group III	 	 	 	 	 	 	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	39,900.000	 







 











 








EXHIBIT H




To Purchase and Sale Agreement

by and between

Diamond “M” Production Company, as Seller,

and

Parallel Petroleum Corporation and Ted Collins, Jr., as Buyer




ENVIRONMENTAL ASSESSMENTS



Photographs of Properties (with captions) as provided in Oil & Gas Asset Clearinghouse data
room.




H-1









 








EXHIBIT I




To Purchase and Sale Agreement

by and between

Diamond “M” Production Company, as Seller,

and

Parallel Petroleum Corporation and Ted Collins, Jr., as Buyer




GAS IMBALANCES



None.





I-1